You can manage your "Active friends list" by swiping left on each row:
If you hide a friend, he will temporary removed from your friend list until a new letter arrives. However he will still occupy your friend list quota.
If you remove a friend, he will be removed from your friend list unless you undo from the "Blocked users" list inside Settings. Removing a friend will free up the friend list quota.
P.S. If you have used up the friend list quota, you will not able to undo.
For both Hide or Remove actions, your target user will not receive any notification.