The engineering for most residential subdivision sites includes grading anywhere from 2 feet deep to however deep they have to go to get to stabilized soils. The subdivision project site I just appraised had an extensive geological report finished that indicated grading would go from 3-12 feet in different areas of the site, and then filled and compacted to provide a suitable base upon which to pour those slab foundations.
There are other ways to build foundations, for example a lot of the hillside homes use reinforced concrete columns or pilasters, sunk into the hillside till they reach granite or bedrock to provide that foundation.
Improper site preparation is a major concern for builders and they generally give it a lot of attention, long before a bulldozer rolls onsite.
Incidentally, if you’re buying a new home and you want any little problems to be cleared up before they become big problems, spend the $300 to have a home inspector come in and perform a technical inspection. Have them look specifically for construction defects and hold that builder to the current building codes. Do it before you take possession of the home.
It might even be a good idea to have them come in about a week prior to closing so the builder isn’t pressured for time to clear these details up. If there are a lot of them, have the builder address them and let them know up front that the inspector is coming come back to verify their completion and the builder would be on the hook for any return visits. Negotiate this two-stage inspection from the outset so as to keep your costs down. It’s well worth the money. And I would never take a referral for a home inspector from my agent – I’d pick them myself.