Hidden file attribute specifies the way in which operating system and various programs should treat the file or folder with this attribute. By default hidden files and folders are not listed with DIR command in MS DOS and not shown in MS Windows dialogue boxes. Hidden attribute is generally meant to maximize protection of files that are essential for proper functioning of the system or, on contrary, to exclude some files and folders from showing up due to their functional or temporary meaning, provided that user in no possible situation might want to delete or modify these files.
Though hidden attribute in most cases is rather arbitrary used, still there are some specific contexts and usage possibilities that makes this attribute functionally essential. Also, in typical cases you should avoid to clear or set this attribute to program folders and system files.