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I only play against 2 people at the moment. They have each played much longer than I (6 months) but they each do this different.
If you have a cannon or doomdiver on a hill, then place a line of gunmen or archers on the hill.....
Do the models block the line-of-site of the cannon/doomdiver?
One player insisted the doomdiver had to be on a second tier of a hill so that it could see over the bowmen.
The second player said that the cannon can see over the gunmen because they are on the slope(since they can fire from 2 ranks), while the cannon is on the peak.
Is there a rule that covers this or does this fall under house rules?
I plan on adding a couple bolt throwers with my doomdiver so I need to figure out what type of hills to place on the table.

It really just depends on what you agree upon before the game starts.

Agreed - strictly there are no rules for 2 tier hills, peaks vs slopes etc, the basic rules only cover hill vs non-hill.

Discuss before the game how you want to handle this - I normally consider the noew game boards to have definite "steps" in them, and the lower slopes I normall dont classify as hills at all, otherwise roughly 1/5th the board is a hill...

Thanks I'll do discuss that before game from now on.

in fact there is a rule on this. When shooting from a hill at something that is not a large target or not on a hill, anything on the same hill as the shooter will block LOS as though they were both on the ground.
However, if you are shooting at something on another hill or a large target, or, god help you, there is a second tier to the hill, then true line, or models eye view applies. The rulebook also states not to take undue advantage of this, so make sure your opponent is aware of this rule and that you agree on how much of a model needs to be seen.

Check out the terrain section in the BRB

Thanks for finding that we must of missed it. I get confused sometimes trying to learn FB and 40K at the same time.