With a clear horizon, whether a vessel is hull-down or hull-up gives some idea of its distance from the observer, using the line-of-sight formula.
In naval warfare, while the upper rigging (of a sailing vessel) or radio mast and stacks (of a steam ship) may give some idea of its type, it is impossible to tell the true nature of a ship when it is hull-down and its armament and size are not visible.