He could be using basic chakra control techniques to suppress his power. By constantly regulating the flow of his chakra, he can keep his true power hidden. For example, he might be using a form of internal chakra suppression similar to what some ninja use to hide their presence.
Another possibility is that Naruto has his own plans and goals that he wants to achieve independently. His true power might be a key factor in these plans, and he doesn't want his parents' influence or interference. He wants to prove himself on his own terms, without relying on his family connection.
In some fanfictions, Naruto's hidden power could be the ability to control a powerful and ancient force. For example, he might be able to harness the power of some long - forgotten bijuu or a mysterious energy that was sealed away in the past. This would give him abilities that are on a completely different level compared to his normal skills.
Well, in some fanfictions, it could be during a life - or - death battle. Maybe when he's facing an extremely powerful enemy that he can't defeat with his known abilities. His friends could be in great danger, and that intense situation triggers the revelation of his hidden power.
One example could be a fanfic where Naruto pretends to be a weak genin even during the Chunin Exams. He might let others underestimate him while secretly observing his opponents' moves and strategies. This allows him to surprise everyone when he finally reveals his true power during a crucial battle.
Perhaps he has hidden the full extent of his Sage Mode abilities. He might be able to stay in Sage Mode for a much longer time than he has shown so far, or have some other undisclosed powers within that mode, like the ability to sense enemies from much greater distances.
He could be hiding from Orochimaru. Orochimaru has always been interested in Naruto's power. Maybe Naruto has discovered a new power that Orochimaru wants even more desperately, so he hides behind a mask to avoid Orochimaru's detection.
Naruto might end up feeling extremely lonely. His family has always been an important part of his life. Without their support and presence, he could become depressed or start making even more reckless decisions. Also, if his family tries to search for him, they could get into danger themselves in the process, which would be an unintended consequence of his hiding.
Maybe he feels betrayed. In the original story, Naruto has faced a lot of discrimination in Konoha when he was young. So in the fanfiction, it could be that some similar or new issues make him decide to hide.
One idea could be that Naruto hides his power to protect his loved ones from being targeted. For example, if his enemies knew his true strength, they might go after Hinata or Iruka. Another could be that he's hiding it as part of a long - term strategy to overthrow a greater evil that is secretly observing the ninja world. Maybe he wants to lull them into a false sense of security before making his big move.