It doesnt say hide to make photo private on iphone5

It's just meant to be a way to help you organize your photos, not to hide particular photos from ever appearing.

So "hide" can be used if you have a collection with say selfies in them and you want to "hide" the bad ones.

All photos on the phone will be visible from Camera Roll.

I can move photos to Hidden Album but the photos remain in Camera Roll in plain view. What good is that?

No it doesn't make photo private, it just hide the photo.