Folder/file hiding works because the OS can't see the hidden files &/or folders. Software like Wise Folder Hider Pro tells the OS not to see the selected files &/or folders by using a driver file that starts with Windows. For the same purpose a rootkit OTOH might modify the OS kernel, or add code to the MBR [Master Boot Record] or the device BIOS, though lots of malware does use a driver like today's GOTD. As is almost always pointed out in the comments, the weakness of using a driver file or modding the kernel is that it depends on that copy of the OS -- anything hidden is fully visible to another copy of an OS, e.g. booting to a USB stick with WinPE. Their ad copy: <i>"The data is completely invisible to other programs or on other operating system..."</i> is at best misleading in that respect.
The NSA [& probably similar agencies] reportedly uses special file systems that no OS can read natively, or adds the file/folder hiding code to a drive's firmware. You & I can use Vercrypt VHDs, which can hold a hidden *nested* VHD. Or just rename an encrypted zip or 7-zip file so it blends in with the 107k+ files in C:\Windows, use cloud storage registered using fake data, or store whatever on an easily hidden, easily destroyed microSD card.
Wise Folder Hider Pro does seem to work OK with Win10 2004, which should be coming next month. Installation is straightforward without undue impact on Windows, while the single driver file, WiseFs32.sys, is added along with wisefs.dat to C:\Windows\. One added registry entry = ""Expire Date"=hex:00,00,00,00,00,00,00,00,", if that helps with the question of whether the license is lifetime as stated or not. Perhaps a weakness, while it's obvious from the program's folder & shortcuts that it's installed, the C:\Users\ [UserName]\ AppData\ Roaming\ Wise Folder Hider\ Config.ini file lists how many folders you have hidden.
TO include hidden files/folders in a disk/partition image backup, use another copy of Windows to perform the backup, e.g. the WinPE used by most of the USB sticks you create with your backup software. Performing a backup while the copy of Windows you're backing up is running of course works just as well, but the backup archive is most always larger, so that's another potential reason to back up using another OS. VHDs like those created with VeraCrypt, or as encrypted vaults using other software, normally don't show any benefit from backing them up vs. just simply copying them elsewhere -- an image backup saves space because wasted space is not included, but there's little if any of that wasted space with a VHD's single file.