Hide Played Episodes - what does this do?

I have an M2 MacBook Air running the production release of MacOS 26. In the native podcasts app, I have subscribed to several podcasts. Either as an overall setting or for each podcast, I can select Hide Played Episodes or Show Played Episodes. Given the episodes list has a filter for All Episodes, Unplayed, Played and Downloaded, the Hide Played Episodes setting appears to have no effect. The Unplayed filter only shows the unplayed episodes, and the Played filter shows the played episodes regardless of the Hide Played Episodes setting.

I was hoping that this setting would sync to the Apple Watch, but it doesn't seem to, and I can see all episodes of each podcast on the watch regardless of whether it is played or not, and whether Hide Played Episodes or Show Played Episodes is selected.

The same question applies to my iPhone (running iOS 26) - that has the same Hide Played Episodes option but the same episode filters, so the option appears to do nothing.

Am I missing something obvious here?