How do I detect distance & overlap between objects in 3D space?

I'm using the project example First-Person Platformer.

Every time I do collision testing between my mouse and an object, it uses the collision surface that is 2 dimensional and its not always constant if I move the object to a lower or high Z height.

Is there a simple way to detect my mouse is clicking on top of a 3D object wherever I click on it, say a tall rectangle, if I click on near the top or down below while looking at it from the side, it registers it?

I can't also solve moving objects in the Z height and having their collisions not bug out into weird different values

The bugginess turns out is because I used to track colission between a sprite in a 2D layer with no parallax vs a 3D layer object

Overlap detection works better now since I use 3D layers for both