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You'll only be able to hide a worksheet if it is placed on a dashboard. Double check that the above sheet actually is on a dashboard. And on the flip side, you're only able to delete a worksheet if it is NOT on a dashboard.
Hope this helps!
Thank you Tracy. You are obsolutely correct. I did attach a wrong worksheet to my dashboard.
In case you would like to Hide a worksheet which is a WIP for your design work but you dont want to publish the workbook with this WIP sheet - Go ahead and add that worksheet in any (relevant) dashboard and put fixed height (2 or 3 pixels). Doing this will you will be able to go back to WIP worksheet and hide that sheet from appearing on the tabs.