This app uses the standard functionality of Mac OS System to make files and folders invisible. The items you see in the Hide Folders window are just aliases representing the original items present in your disk.
The original files and folders that are hidden using the app, remain in the same place they were in when they were visible, and they move when you move the folders that contain them and are also copied and deleted along with the folders that contain them. Also, all the files and folders contained in a folder made invisible are themselves invisible. For example if a file is located in an invisible folder, to make the file visible you need first to make visible the folder that contains the file.
Note: programmers and experienced users could gain access to a folder or a file made invisible. Also please be warned that there are some applications that let you open files contained in a folder made invisible.