It's not about hiding the website you visit but about hiding the ip it was visited from. If Google can't tie your ip to the website request they can't use it to market to you. I'm not sure why the hash is made a big deal but hiding your ip is the real value here.
No it's the combination of the two. If they tie the ip to the domain and then tie that ip to non-safe browsing websites that were visted by that same ip and they can easily start to identify the "safe" sites you visited. If you stop that IP from being identified (also stopping most if not all browser fingerprinting techniques) than it's MUCH harder to identify you as the person that visited those sites. It's the relationship that really matters. Apples proxy breaks that relationship. So does a good VPN setup.
