We changed the way we handle hidden folders. It requires you take action with hidden folders you converted - you must copy all their content to a new feature, a Hidden Folder.
To hide a folder in SLS2, use the Hidden Folder option in the Add New menu just above the sitemap.
Pages placed inside a hidden folder will not appear in any navigation menu, but can be linked to from any other page.
SLS2 handles interior page navigation such that you may no longer need to hide sections. Interior page navigation only shows pages and folders at the same level as the open page. As you drill down, the same thing holds true.
The old technique of hiding sections from the main navigation menu involved placing a section inside of another section. This technique is no longer necessary. You should move sections with pages to the proper level on the site map and then archive the empty folders by clicking the title in the sitemap and then clicking the Archive button.