I'm only familiar with 3.5, not Pathfinder, so my comments will be coming from that point of view. They will also be coming from the point of view that the ability is actually meant to be functional and such, so any odd interpretations that mean the ability doesn't actually function or change the gameplay are discarded.
Hide shows that in order to normally hide from something:
You need
cover or
concealment in order to attempt a Hide check.
Total cover or
total concealment usually (but not always; see Special, below) obviates the need for a Hide check, since nothing can see you anyway.
If people are observing you, even casually, you can’t hide.
Those are the two big things, but the link does have the rules for sniping and such. The sniping rules follow the -20 to hide for attacking just like it is in the first line of:
Your Hide check is opposed by the
Spot check of anyone who might see you. You can move up to one-half your normal speed and hide at no penalty. When moving at a speed greater than one-half but less than your normal speed, you take a -5 penalty. It’s practically impossible (-20 penalty) to hide while attacking, running or charging.
With regards to the Ranger, the Hide skill does specifically call it out under Special:
A 13th-level
ranger can attempt a Hide check in any sort of natural terrain, even if it doesn’t grant
cover or
concealment. A 17th-level ranger can do this even while being observed.
So it explicitly says that a 13th level ranger can hide in any sort of natural terrain and does not need the usual cover or concealment. That does not obviate the need to not be directly observed because everything else about the Hide skill is still in effect.
Cover is noted as being "Any barrier between an attacker and defender" according to the
glossary.
Concealment is not so well defined since it's self-referential. Looking at the
glossary shows that concealment is "Something that prevents an attacker from clearly seeing his or her target."
Blur is one of those "somethings" but it can also be something like
shadowy illumination. Note that in that link it specifically says it's not possible to hide in the shadows in the range a creature with darkvision.
At 17th level, the ranger can then hide even while being observed. If we look at the ranger's abilities, we see that this only applies in natural terrain, but it still means several things such as the character no longer needs to provide a distraction to hide because it can hide even while being looked at.
By the way, I don't recommend trying to relate this into something realistic. WotC itself has noted that Olympic athletes are at most about 6th level, so things like Camouflage and HiPS are superhuman abilities.