UPDATE: Blizzard released a statement the 20th of October disproving this analysis regarding there not being a hidden MMR. Scott Mercer says "...the amount of MMR (and SR) you go up or down isn't simply a matter of whether you won or lost, and what was your predicted chance of winning" as well as referring to two types of systems throughout the article.

Hidden MMR is a concept common in games that do not display one's rank precisely. Counter-Strike: Global Offensive and League of Legends are two games in which you are not shown your "real" rank. In CS:GO you will only see your tier and in League of Legends only your tier and your League Points (LP). Counter-Strike having a hidden MMR is self-explanatory but it might be a bit harder to understand with League of Legends. When the game's ranked system originally was launched it used an ELO system which accurately showed your rank on a scale between 0-3000+. Compare this precise number to the tier + LP system you have today and you'll notice a lot of faults. The ranks in the current LoL system are definitely not as accurate as they were in the game's first season. In the forums you have players explaining a concept of "Hidden MMR", which determines how much LP you will get. Going on a winstreak pads your Hidden MMR and losing lowers it. When you have a padded MMR, winning games will result in more LP until your LP catches up.

Which leads us back to Overwatch. The concept of hidden MMR has carried over from League of Legends and the layout of Overwatch's first season is at fault for this. Blizzard introduced a ranked system with a 1-100 ranking, which then had a slider showing how far you'd come between your current, lower, and higher rank. The lack of hard data birthed the notion of a hidden MMR that was not necessarily wrong! There are definitely things going on in the background, e.g. you were capped to one rank gain per win and during severe winstreaks you'd find yourself against vastly higher ranked opponents. This should be evidence enough of there being a hidden MMR, since you're matched with these players even though your rank is lower and you're on a winstreak. Not to mention that a loss didn't end these games outright, you'd be matched with increasingly lower ranked opponents until you'd start winning again.

Season 2 was launched the 1st of September, introducing a system with more reliable numbers, 1-5000. There is no known cap of how much SR you can get in a win (my personal record is 104) but there are still talks of a Hidden MMR. It's reasonable that people would think this. Just like in Season 1 a winstreak will make you play in higher ranked games, and a loss streak in lower ones respectively. Because of this, players still assume there are two separate rankings: Your visible and your hidden one. Again, this made sense in Season 1 where you were capped and didn't have hard numbers on your ranking but now you do. Unlike in Season 1, ending a streak puts you back into normal gains or losses. I'd describe the Season 2 ranking bonuses as just that; winstreak bonuses.

In Season 1 and the earlier stages of Season 2 there was a lot of talk about Top 500 not being influenced by your SR but by your "Hidden MMR". People referred to players getting into the top 500 while in a lower rank than those who'd typically get it. They for example mentioned players getting Top 500 at rank 72 while the entry level for Top 500 at the time was at ~78. While I couldn't find much evidence for these claims, I do have evidence against the hidden MMR in Season 2 thanks to Blizzard themselves. In the Halloween patch released on the 11th of October Blizzard released an official Top 500 leaderboard. In this leaderboard you see every player's spot on the leaderboard numerically ordered by SR, which wouldn't be possible if there was a Hidden MMR which determined one's place in the Top 500. You can go see for yourself, all the way spot 1-500 is perfectly ordered by SR.

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In conclusion, hidden MMR used to exist in Season 1. Hidden MMR is the result of inaccurate UI ranks and limitations on how much one can gain in a game. When the old imprecise Season 1 system was scrapped and exchanged for our current one, the hidden MMR went out with it. What we have now is an accurate rank comparable to League of Legends' old ELO system, and this can be verified thanks to the newly implemented Top 500 leaderboard.

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