That's not necesarily true. They could store a full password hash and a hash of the 4th and 17th character separately.
You can't hide individual letters of alphabet with a hash. Not even with a salt and an expensive hash. It's a hopeless case where a brute-force attack takes only 26 times (or 676 for a pair of letters) longer than a comparison you do during normal operation.
BTW: it's also not possible to use hashes to hide/anonymize phone numbers or IP addresses. The attacker can generate hashes of all possible values and see which one is it.