The V2 Planning currently only hides parent and children of that parent if all children are Closed and the parent is closed. The purpose of this feature was that when the content of your release or sprint is huge you can click on the "Hide Closed Items" and it would show only artifacts that are open.
+ "Hide button" should be mark as "pushed" when items are hidden (
http://getbootstrap.com/2.3.2/javascript.html#buttons -> "Single toggle")
+ Add a little info in submilestone content saying that "severals closed items are currently hidden" if any