IntelliJ's project view has a configuration option to 'Show excluded files'. When this option is enabled the excluded files are not displayed in the project view. I suspect idea-gitignore hides these files regardless of project view configuration.
Somehow I am unable to convince IDEA to hide files from the project-view even when they are ignored in git. Funny, it does display them greyed so it does know they are hidden. How to hide them for good is still a mistery to me.
I don't want to mess with the general IDEA configuration, I just want to make hide the gitignored files.
Can I ask you to check if this issue is still present in v2.1.1?
FWIW i noticed this as well (ignored files being visible even though i told the plugin to hide ignored files), it was not until i restarted intellij that the ignored files effectively became hidden.
actually it's not all that clear. I have a project containing two git repositories, with identical gitignore. The hide ignored files only works in the second git repo, not in the first one. hopefully the screenshot makes this clear:

i am using the latest version of the plugin (just installed this morning) and intellij 2017.2.5
I am also having this issue
@hsz I'm also having this issue too +1, and this feature don't work with nested ignore files in multi-package repo. But, if I write in root ignore file something like
packages/**/*
!packages/**/lib
!packages/**/lib/**/*
!packages/**/tasks
!packages/**/tasks/**/*
!packages/**/storybook
!packages/**/storybook/**/*
!packages/**/.npmrc
!packages/**/.npmignore
!packages/**/yarn.lock
!packages/**/package.json
!packages/**/README.md
folder packages will be marked as ignored and hiding in tree view, while it have nested not ignored directories will be marked as not-ignored
In Rider showing All files should do not show ignored files when Hide ignored files is selected.
Hello,
my problem is that it doesn't hide the files/dirs ignored.
Please see the image below.

In IntelliJ 2019.2 I see both the issue mentioned above ("dist" not being hidden), as well as the fact that checking "Show Excluded Files" doesn't allow me to see the files inside of dist.
This seems easy to reproduce to me. Simply clone this repo and open the project:
https://github.com/tommedema/serverless-mono-example
You'll need to install the packages and run the build command to populate the dist folder as well.
The behavior is slightly different depending on which view is used in the Project page ("Project Files" or "Project").
Would really appreciate some update on the disposition of this issue.
IntelliJ IDEA 2019.2 introduced native support for the dot-ignore files handling of Git (.gitignore), Mercurial (.hgignore), and Perforce (.p4ignore). Because of that, such an issue is now obsolete.
Most helpful comment
actually it's not all that clear. I have a project containing two git repositories, with identical gitignore. The hide ignored files only works in the second git repo, not in the first one. hopefully the screenshot makes this clear:
i am using the latest version of the plugin (just installed this morning) and intellij 2017.2.5