note: I'm new to these parts. If what I describe already exists, sorry, I didn't find it.

Describe the solution you'd like

I like the idea of Hidden categories. I can see it making 95% of the time my bag window will be far easier to look through.

I'd like a button toggle on the top bar that is a "show hidden categories" button.

Pressing the button would toggle the hidden categories to display until the button is pressed again (even through closing/opening bags multiple times).

Have you tried creating a Section on the categories tab. You can create multiple Sections that allow you to expand/collapse sets of categories independently directly from your bags?

Sections worked, thanks :)