FYI, IO540 (and others),
The ANO has been amended. It is no longer a VFR requirement to fly 'in sight of the surface'. The requirement is now 'with the surface in sight'. (ANO, Section 2, Schedule 1, Section 5, Visual Flight Rules 27, 28 etc etc.)
And 'With the surface in sight' has now been defined (ANO, Section 1, Part 14 pg 28): 'With the surface in sight' means with the flight crew being able to see sufficient surface features or surface illumination to enable the flight crew to maintain the aircraft in a desired attitude without reference to any flight instrument and 'when the surface is not in sight' shall be construed accordingly.
So, it probably doesn't impact on the mountain/valley fog scenario above but it certainly no longer allows a VFR only pilot to fly above, say, a broken layer with the occasional glimpse of the surface.
HTH