The Show Hidden command makes hidden entities visible (but still distinctively rendered so it is clear what is shown and what is hidden) so that they may be selected.
When the Show Hidden menu item is selected, it will be shown with a checkmark next to it in the View menu, and any hidden entities in the Display window will be shown. The color used for hidden entities may be changed in the Preferences menu (Edit, Preferences). When Show Hidden is not selected there will not be a checkmark next to it, and any hidden entities in the Display window will not be rendered.
With Show Hidden off (left) hidden entities are not displayed, but with it on (right) they are.