When you create a new software wallet, you get this screen:

You can choose to add a passphrase.

Using a passphrase should be the same as hidden wallets since any password will open a valid wallet:

This is something different from using a password to encrypt your wallet which you can also do with Sparrow.

The passphrase is just a 25th word added to your seed, as the BIP-39 standard dictates. So, the idea is that even if your seed gets compromised, the wallet generated by only the 24 words is a different one than the wallet made by 24 words + passphrase.

To setup a decoy wallet, simply import just the 24 words and deposit a relatively low amount of BTC in there. Whoever stole your seed will think "I got it" and will stop looking, leaving the majority of your funds safe in the wallet unlocked by the passphrase. If something like that happens, it is still good practice to wipe the "real" wallet and move your funds to a new one.

Hope this helps!

I'd then keep a little honeypot of sats on the decoy wallet so that if you ever see those sats move then you know that your seed phrase was compromised. In that case it should hopefully give you enough time to move the sats protected by a passphrase (not stored with the seed phrase) to an address secured by a different signing device.