Thank you, Penguin.
The action of a fretted bass is a function of the collective distances from the string to the fret crowns, at the various points along the string. The distance from the fret crowns on down to the fingerboard surface is not part of that. Heck, a sitar doesn't even have a fingerboard immediately below the frets; they hang in space. Not to mention the Gittler guitar and bass.
It can be argued that the height of the fret affects the distance of metal any vibrations go through before they get to the fingerboard wood, and that this affects the tone. But any effect here would be minor, nothing like "makes it sound fretless." The operation of a string on a fretless is too different from the action of a string on a fretted for that. Heck, the absence/presence of glue to hold the fret, and the type used, could have at least as much effect as the height of the fret in this regard.
And while on that subject, how does a sitar get its buzzy tone, which is basically the same as the mwah of a low-action fretless bass? It's not due to the frets, it is due to the bridge-- which, rather than having a sharp saddle, has a surface just ahead of the witness point, which the string rubs against/reflects off of while vibrating. Just like the area just ahead of your finger on a fretless, and just like the surface introduced on the Neuser-ABM convertible "fretless sound" bridge.