If your using 12V in, you should be seeing 12V out from the sensor. The Ramps/Arduino is using 5V logic, so you don’t want to put over 5V on an input pin. The Arduino input pin will read a logic TRUE, or HIGH if the voltage is between 2.5V and 5V. It will be FALSE, or LOW if it’s less than 2.5V. I’m sure they recommend dividing the voltage for a 3.5V HIGH signal to be safe.
It sounds like your sensor may not be working right. Double check the wiring diagram, the wire colors on these sensors are a bit different.