Muted category (default or not) appears in Latest

IIRC that isn’t how you would hide things from latest, you’d have to use the suppress this category from the homepage in the Category Settings for Jobs (go to Jobs category, choose Edit Category, then Settings)

However, since your homepage is now Latest, I don’t think that option will work for you either. I do know if Latest is your homepage, it does work, as my sandbox suppresses the Playground category just fine.