That's interesting as I am using embedded objects and spanning them across multiple areas without a problem? The issue seems to be with the scale of the object. Please take a look at the following screen shots. Note that this was all done with the default SDK install.
1. Here you can see the setup of the standard Rock object. I have placed it on the terrain, spanning two areas.
2. Now you can see that the rock correctly blocks the nav mesh. Note from the previous screen shot that the rock is embedded and is spanning two areas.
3. Now all I've done here is scale the rock up from 3.4 to 12.77.
4. After making the scale change, you can see that the rock no longer blocks the nav mesh.
5. However, I went back into the editor and lowered the scaled rock down into the terrain. It now fully blocks the nav mesh.
So it appears as though embedded objects do fully block the terrain, however there seems to be a bug relating to their scale. The bigger you scale them, the lower you have to place them into the terrain for them to block the nav mesh. I'm hoping this can be easily fixed as it affects my project since scaled objects cannot be placed correctly.