Hi Rory Bennison,
The documentation doesn't indicate that Hosted Feature Layers are unsupported, and I was able to reproduce this on my end. I agree that since Delete Rows is in the same toolset, we would expect both to work with Hosted Feature Layer input.
I logged BUG-000128389 for this behavior. If you would like, you can create a case with Eagle Technology Support and attach your customer number to this issue. As you found, the current workaround is to use Delete Rows.
Hope this helps - let me know if you have any more questions.
-Peter