The search path determines the order of the folders in which the ITP/MDK Repository looks for (Rich) Text Blocks, Forms and Views. If two different objects with the same name exist in different locations in the search path, the one that is mentioned first will be retrieved e.g., if the search path is Folder 2 > Folder 1 and both Folder 1 and Folder 2 contain a Text Block 'my Text block', an insert statement TEXTBLOCK NAME "my Text block" will insert the Text Block from Folder 2. The 'my Text block' Text Block residing in Folder 1 is said to be hidden, as it will not be found by the given insert statement, assuming the first Text Block found has an appropriate revision.
Hiding is in itself perfectly valid. Configuring the search paths gives you the ability to determine the object that should be found. It may, however, also occur by accident. Therefore, the ITP/MDK Repository will issue a warning when renaming a Text Block, Form and View may cause another to be hidden for some possible insert statements. It will also mention the references for which this hiding possibly occurs. Note that the ITP/MDK Repository has no way to determine what insert statements are actually used, so, depending on your models, no hiding may actually occur.