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What is the difference between the two sentences given below?
a) We do not have time to watch the squirrels hiding their nuts in grass.
b) We do not have time to watch the squirrels hide their nuts in grass.
Other examples:
I watched her dance/dancing gracefully on the stage.
I saw you pack/packing the bag in hurry
I watched her graceful dance/dancing on the stage.
My question is with reference to the verb forms.
Both forms are accepted as common English usage and have approximately the same meaning. They can be used interchangeably. The difference in meaning is very subtle and probably not well defined, so it is not worth making a big thing out of the distinction.
Hiding describes the continuous, ongoing performance of an action which happens frequently and may continue into the future. Hide describes an action which is happening right now, regularly or habitually and without ceasing.
So if you watched the squirrels hiding their nuts you saw them going through the process without staying to see them finish. Whereas if you watched them hide their nuts you are saying that you saw them complete the task.
sammy gerbil answered well. Differences between simple present and present continuous... see conjugation tables:
