WCM tip #31: Hiding terms pinned from a catalog breaks URL rewriting
If you try to hide Navigation Terms pinned from a catalog in the navigation, URL rewriting for catalog items will break and you will see the physical URLs of those items instead.
When connecting to a catalog in cross-site publishing scenarios SharePoint 2013 allows you to integrate the catalog with your site and rewrite URLs for catalog contents to present them to your visitors just as if they were a part of your website. There are a few things required for the URL rewriting to work properly amongst which the fact that the hierarchy terms pinned from the catalog must be visible in the Current Navigation. If you for some reason hide a pinned Navigation Term in the Current Navigation, URL rewriting for the underlying catalog items will break and you will be seeing the physical URLs of those catalog items instead.