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Hidden services


I read the docs and slides on hidden services. But I still don't quite
get it.

On slide 19 it looks as if there was only one hop between the client and
the server. Is this the case or has the diagram been simplified?

If only client and server are "for real" and the all tor servers along
the path are compromised then can the operator find out what the hidden
service is offering and who is communicating. Inside the Tor network(not
using exits) everything is encrypted, right?! So does the last node in
the path, connected to the hidden service know, that it is talking to a
hidden service? As far as I understand hidden services can be run by
servers and clients.

http://www.fastmail.fm - mmm... Fastmail...