When enrolling users in a course, you can control whether or not they can see users in other sections besides their own (see: How do I limit a user to only interact with other users in the same course section? ). However, if an instructor sends a message to their whole course through the Conversations tool, the students who receive the message will be able to view all recipients in the "To" line of the message, which will include students in other sections of the course.
At our university, we have lots of faculty with multiple sections combined in the same course, and it's always set so that students cannot view students in other sections (as this would violate privacy standards). The Conversations tool should respect these settings. When an instructor sends an email to the whole course, students should only see recipients that they would normally be able to view in the People list of that course. Otherwise, the "limit this user to only see fellow section users" restriction is a bit lacking, considering it doesn't apply to all areas within the Conversations tool.