Jason - try this workflow and let's see what happens. Instead of applying a Definition Query on the hosted feature layer (HFL), select by attribute those features you wish to run a GP tool on, right-click on the HFL, select Selection->Make Layer from Selected Features and do your GP work on the selection layer. Is the result the same? Please advise.
I don't see the behavior you described. I selected a hosted feature layer from AGOL, built a Def Query, and ran the buffer tool on the hosted feature layer. Only those features that were screened out by the Def Query had a polygon created for them.