I was drawn to the same conclusion.
It does work in Scrivenings, when you hide the markup for anything within a group (hierarchy, if you will). But as soon as you click outside of the hierarchy in Scrivenings mode the markup returns–basically selecting another grouping in the Binder, even a lower hierarchy grouping.
To turn it off in Scrivenings mode, you need to apply the shortcut (Alt-Shift-H) twice, for some or other reason. But then you’re still subject to what happens in my previous paragraph.