An HMD device with a see-through display and depth sensing capability is configured to selectively dim or fade out a display of a virtual reality environment to enable a user to see the real world without obstruction by the virtual world when a distance between the user and a real world object is determined to be less than a threshold distance. The current height of the user's head (i.e., the distance from head to ground) may be utilized when performing the dimming/fading so that different threshold distances can be used depending on whether the user is standing or seated.