Hiding is absolutely good design at every level. Not seeing UI controls, preferences, or anything that is not relevant to the task at hand can make that task simpler, easier to understand, and more productive. If you need to see dotfiles, well, you might need to know about man pages or at least that commandline programs take flags. It's not like they're invisible.

There are plenty of examples: video games slowly reveal more skills as you learn and encounter progressively harder enemies. A good app should be usable at first launch (or only require minimal setup). Configuration and advanced features can come later.

Another great filesystem level example are OS X app bundles- an entire directory hierarchy appears as a single file/application. If you need to look inside (not likely), you have to know about right-click or the action widget, but for 99.9% of the time, you see only what you need. OS X and Windows also both completely hide "system" folders in Finder/Explorer as well.

Yes, hiding things can be confusing if it's not done right, but the alternative of showing everything always is definitely not the way to go.