This only hides the no name contacts as it shuts off that group from being displayed. But yes, they're still in there and they're still increasing in quantity behind the scenes, which will slow down Mail and eventually surprise you with a mail app crash or disk full issue.
Seems the source is the broken way Outlook accounts are syncing with the phone mail app.
I didn't see this until iOS 10 on my iPhone 6s Plus.
Does not seem to be a fix. Other than turning off outlook contacts sync all together (which erases all outlook contacts from your phone). Not sure that's a good idea.
Monthly best to select the meta no names group(deselect all others), so only the no names are displayed.
Then delete them all.
Then change group display choices back until next month.