Can you guess why importing the attached x.py does nothing, without
printing "hello" at all?

The real issue shown in that example is that 'return' and 'yield'
outside a function are ignored instead of giving a SyntaxError if they
are optimized away by 'if 0:'.  

(Hint about x.py: the yield sets the CO_GENERATOR flag before it gets
optimized away.  So clearly, that's a way to comment out a whole module
-- just put "if 0: yield" anywhere at top-level...)

See also issue #1920

This was corrected by Benjamin with r69158.
Now the yield statement is still optimized away, but at least the
CO_GENERATOR flag is set only when compiling a function.

...which does not really solve anything, as "if 0: yield" at
module-level is now just ignored instead of raising a SyntaxError (e.g.
like "if False: yield").

Here is a patch that properly raises SyntaxError when 'return' or  
'yield' statements appear outside a function.

I did not bother to update the (deprecated) compiler package: it seems 
to be completely foreign to this kind of checks...

>>> dis.dis(compiler.compile("return 1", "module.py", "exec"))
  1           0 LOAD_CONST               1 (1)
              3 RETURN_VALUE
              4 LOAD_CONST               0 (None)
              7 RETURN_VALUE

You should remove the error logic compile.c for "return" and "yield" in
function calls.

The problem with this approach is that every SyntaxError generated
during bytecode compilation must be moved to earlier. For example, I can
still use "break" and "continue" outside loops with your patch. The only
way I can think of around this is to compile the block anyway and remove
the extra code later. Maybe this optimization could be moved to the peep
holer?

msg81023 indicates that more work is needed on this.

With the last 2.7 and 3.7, I can import the x module and the 'hello' is automatically printed.

Python 2.7.15 (default, Oct 15 2018, 15:26:09) 
[GCC 8.2.1 20180801 (Red Hat 8.2.1-2)] on linux2
Type "help", "copyright", "credits" or "license" for more information.
>>> import x
hello


Python 3.7.3 (default, Apr  2 2019, 06:55:20) 
[GCC 8.3.1 20190223 (Red Hat 8.3.1-2)] on linux
Type "help", "copyright", "credits" or "license" for more information.
>>> import x
hello

>>> content = open('x.py').read()
>>> import dis
>>> dis.dis(content)
  1           0 LOAD_NAME                0 (print)
              2 LOAD_CONST               0 ('hello')
              4 CALL_FUNCTION            1
              6 POP_TOP

  3           8 LOAD_CONST               1 (None)
             10 RETURN_VALUE


but because I am not sure about this issue, I prefer to ask Serhiy.

Can we close it?

Thank you

The issue is not fixed. The problem is that this still allows invalid syntax because the code is optimized away:

def f():
    if 0:
        break
    print("Hello")

f()

The drawback of compiling the dead code is adding cells for unneeded constants and local variables. Also it can create less optimal code for jumps.

>The drawback of compiling the dead code is adding cells for unneeded constants and local variables. Also it can create less optimal code for jumps.

Is unlikely that this situation arises often enough that this is a concern. We would be sacrificing correctness for speed and I think that is an error.

If there is a more optimal approach I'm happy to implement it.

New changeset af8646c8054d0f4180a2013383039b6a472f9698 by Pablo Galindo in branch 'master':
bpo-1875: Raise SyntaxError in invalid blocks that will be optimised away (GH-13332)
https://github.com/python/cpython/commit/af8646c8054d0f4180a2013383039b6a472f9698

New changeset 85ed1712e428f93408f56fc684816f9a85b0ebc0 by Miss Islington (bot) in branch '3.7':
bpo-1875: Raise SyntaxError in invalid blocks that will be optimised away (GH-13332)
https://github.com/python/cpython/commit/85ed1712e428f93408f56fc684816f9a85b0ebc0

The issue is not fixed yet. The compiler now rejects

if 0:
    return

but it still accepts

if 1:
    pass
else:
    return

while 0:
    return

See also discussion in Issue37500.