When OFP was originally released, bullet tracers could been seen when firing rifles and machine guns. This changed in OFP version 1.20, when BIS unintentionally introduced a coding error that dropped tracers altogether.
As of OFP version 1.26 beta, tracers have been reintroduced and there is a new option under difficulty settings to enable or disable them. However, even if you disable them, machine guns will continue to give off tracers. The difficulty setting only affects tracers from rifles but not from MGs and heavy weapons.