Thats the teleport bug. Fall with your car in the water or blow it up somehow and teleport instantly. The camera will zoom out like that and the game will crash. Theres a way of stopping it and the game doesnt crash, but all the walls get black. Walls, slopes and lots of other things, only horizontal tiles dont. Its kinda funny
Never let realism get in the way of fun. I've always wanted to do combo rocket shots, hitting the target multiple times before they hit the ground but that would be a lot more work and not very feasible in a top down game.
That would be indeed quite a bit more difficult to pull off in a top-down game like GTA 2 - especially since you can only use molotovs and grenades to do so, as those are AFAIK the only weapons that can be thrown upwards and theoretically hit airborne targets.