The Briton said on Monday that he expected Mercedes, champions for the past two seasons, to keep their car's true pace under wraps right up until they arrived in Australia.
Mercedes did far more mileage than any other team in last week's first test in Barcelona, and the second and final test starting on Tuesday is expected to focus more on outright performance and race simulations.
"I think they'll probably keep their powder dry and not show their hand (in testing)," said Hill at a media event organised by Sky F1 television.
"They don't need to," added Hill who this year marks the 20th anniversary of his 1996 title season. "I think they will just see where everyone else is at.
"Winter testing is the phoney war. When you've got an advantage, why show everyone what an advantage you've got?".
Mercedes have won 32 of the last 38 grands prix, and both titles for the past two years, with Hamilton now chasing his fourth crown, which would be an unprecedented achievement for a British driver.
Ferrari, the only team to beat Mercedes last year and determined to mount a real title challenge this season, have raised hopes of a closer battle after posting the fastest times on three of four test days last week.
Hill said any "cautious optimism" from Mercedes should be taken with a pinch of salt and suggested their real thoughts were of more dominance ahead.
"I think Mercedes must be really happy with the way things have gone, to have such reliability. It must be hard for Ferrari and the others challenging them to see that," he said.
"I can't believe it's going to be an even more dominant season from Mercedes but if it is, we've still got two drivers within the team who are close enough to create a bit of tension."
Hamilton's German team mate Nico Rosberg won the last three races of 2015 from pole position, after the title had already been won, and is also out of contract at the end of the year, giving an extra impetus to perform.
In 2014, the two Mercedes drivers took their title battle down to the last race of the season.
(Editing by Tony Jimenez)
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