The answer is “it’s complicated” and you are correct in that we have struggled about a way to communicate what is essentially a completely new “social technology” in a way that people will understand.
Holacracy involves a great deal of hierarchy, but instead of concentrating decision-making power in a few people, it concentrates them into roles. These roles have a great deal of decision-making power in their area only. That allows power to be distributed throughout the organization, without avoiding the perils of consensus-based decision-making that “flat management” companies face.
Here’s a blog post that explains what I mean: https://blog.holacracy.org/holacracy-vs-hierarchy-vs-flat-orgs-d1545d5dffa7