It is by design, unfortunately. Sony thought it would be cute to take a portrait page and divide it into two parts and display that in landscape. So when in landscape you see the top half of an ePub page followed by the bottom half when you scroll down. When the top half is viewed the middle of the page (bottom part of the screen) might cut off a line or two. When the bottom half is viewed the middle of the page (now the top part of the screen) might cut off a line or two. The middle section of the page (in portrait) is overlapped so you don't actually lose any text. But it is incredibly annoying and has been complained about since the 300 model was released. Apparently Sony doesn't understand the concept of reflowable text and that it should do so regardless of portrait or landscape mode.

The 300 model greyed out the overlapped text, but the 350 model does not do that so it is even more annoying than it was on the 300!

BTW, next to the text size indicator in the bottom-left part of the screen is an indicator icon that shows whether you are on the top or bottom of a page. Scroll up or down and see how the icon changes.