I often us strike indicators when nymphing deep. Deep means leaders 12 to 20+ feet long in both moving and still waters. The main purpose for me is to help position the fly deep and help in managing the floating fly line. With a softer tip rod (vs. fast action) , the feel of the take can still be detected before the the strike indicator "indicates". There are times when large trout will actually try to eat the indicator, if that happens, usually in shallower water, say up to 6 feet deep and very clear, then I switch to a fly indicator, a large dry, hopper or similar with a dropper nymph, anywhere between 6 to 24 inches below the dry indicator. I've caught many fish on either fly!
The indicator does not defeat the purpose of hiding the fly (your question) unless it's very large and the fly is very close to it, like it would be in shallow water.
Pete AKA Frenchcreek from Calgary