In an Artificial Neural Network (ANN) designed for recognizing handwritten digits, the hidden layers serve the crucial function of capturing the internal representation of the raw image data. These layers learn to extract and represent features such as edges, shapes, and textures from the input pixels, which are essential for distinguishing between different digits. By transforming the input data through multiple hidden layers, the network gradually abstracts the raw pixel data into higher-level representations, which are more informative and easier to classify into the correct digit categories.