Semi-continuum modelling of unsaturated porous media flow is based on representing the porous medium as a grid of non-infinitesimal blocks that retain the character of a porous medium. Semi-continuum model is able to physically correctly describe diffusion-like flow, finger-like flow, and the transition between them. This article presents the limit of the semi-continuum model as the block size goes to zero. In the limiting process, the retention curve of each block scales with the block size and in the limit becomes a hysteresis operator of the Prandtl-type used in elasto-plasticity models. Mathematical analysis showed that the limit of the semi-continuum model is a partial differential equation with a hysteresis operator of Prandl's type. This limit differs from the standard Richards' Equation (RE), which is not able to describe finger-like flow. Since the physics behind both RE and the semi-continuum model is almost the same, we suggest a way to reformulate the RE so that it retains the ability to describe finger-like flow. We conclude that RE should be reconsidered by means of appropriate modelling of the hysteresis and correct scaling of the retention curve.