Hidden orders trade off queue priority for invisibility. At most venues a displayed order at the same price is filled first, so hidden size sits behind everything shown even if it arrived earlier.
Institutions use them to work size without signalling. The flip side is that you give up the free option value of being seen: displayed orders attract counterparties, hidden ones only meet flow that was already coming.
Example: the book shows 500 shares offered at 30.00, but there are also 20,000 hidden at 30.00. A buyer taking 5,000 sees a "surprise" fill: 500 displayed, then 4,500 from hidden size, and the offer never moves. Traders reading level-2 call this a wall that will not break.
Related: iceberg-order, midpoint-peg, display-size