The purpose of hiding buildings, at least the way I use it, is to build things, and find things, that are behind buildings.
Cutting factories and attractions on the first level of hiding, makes it possible for me to recognize them, while still being reasonably able to see to build a station, or just roads, behind them.
The second level of hiding, is probably more for looking at the flow of vehicles, and interacting with them, rather than construction. Therefore, more things can be made truly hidden. Often I wish for a way to make stations invisible to.
So the first level of hiding hides more than stated, while the second hides less. Writing an exact description of what gets hidden, would probably take too much space.