I started a game where I was hosting, had a network player logged in (who was only an observer) and there were six mega CPU. I had setup this game with Fog of War = disabled, so both I and the observer could see the whole map.
Then I switched teams, joining one of the CPUs. This caused my FoW mode to change from 'disabled' to 'explored'. It also did the same for the observer, he could now only observe two players instead of all of them.