How is collision detection and movement typically handled in a FPS, particularly handling slight changes in ground height such as stairs (both on incline and decline)?
Entities typically represented by a capsule (cylinder with spheres on the ends) against world geometry (or a simplified collision mesh) for world-ent collision.
Stairs are usually either no-collide with an invisible ramp, or below a certain height you usually get a lift up as a side effect of collision resolution. (you'll get interpenetration with movement as a part of step size, and resolution will pop it out upward as the closest plane)
I think this is how Unreal 3 works, but I could be wrong. I recall seeing a bounding box hierarchy in Source, but I can't remember if that was just for combat. regardless, capsules are simple and fast
In Unity 3D, the easiest way is to have the first person controller. Usually the character has to jump up if the step height is higher than the step offset. But another way to do it is add a box collider and rotate it so that the character can skim the stairs easily, as if it were a ramp.