iMessage marks messages as read on it’s own and does not display notifications

As long as Messages is in the foreground with a conversation opened and the iPhone is unlocked, Messages coming into to that conversation will be received as immediately having been "read" sans notifications. Due to the automatic screen lock delay time as well as the Lift to Wake (or whatever it's called) setting possibly being enabled, you should either back out of the conversation to the conversations list in Messages or bring up the Home screen so Messages is in the background whenever you're done reading messages and are going to put the iPhone aside for a while.

Also, if you any other devices e.g. a Mac that you leave unattended with Messages opened to the foreground, the same thing will happen with new Messages coming into whatever conversation is or might be selected. Those messages will be received as immediately having been read sans notifications on all associated devices. So put Messages in the background when you're done with it on any/all devices.

Also for what it's worth, sending read receipts is optional. Less obvious is that it can be set the other way in any conversation than what it's set to in the app settings.

Also, sorry I don't know about the proximity sensor or even what that is.

My bad. I just thought some people might not realize that once a message is displayed on one device the notifications clear from that as well as any other associated devices. So when you hear the audible notification, and soon thereafter find no visual notifications, they may have been there momentarily then disappeared by virtue of the message having been displayed on another device. If it's displayed immediately on any device, notifications don't happen at all. At least that's been my experience. Another thing that could come into play is Do Not Disturb settings which are device-specific. Otherwise I believe it could be a bug in iOS 11.4.

Update: If you happen to be using contact relationships then also take a look at this:

Are you not getting notifications from only ONE person in your contacts? Try this...

Hi.

I seem to be having the same problem as described above. Both with messages and proximity sensor.

I read your reply, but even when I close out message app, lock phone, etc. I am still having this problem.

Since you read my posting and tried my suggestion and still experienced the problem all within 6 minutes, I'm clearly barking up the wrong tree. My badinov.

In case you're still having the problem, this might be relevant:

No text notification from one contact only. Hide alerts is off!!