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Can feature datasets be prevented from appearing under Database Connections in ArcCatalog?
For ArcGIS 10.2.1 and previous versions, ArcCatalog users see all existing feature datasets in the geodatabases to which they can connect, regardless of whether they can access any of the component feature classes. Revoking access on a feature dataset revokes access on component feature class layers and tables; however, the feature dataset is still visible to all users.
New functionality was implemented at ArcGIS 10.3 and ArcGIS 10.2.2 for (Desktop, Engine, Server) Geodatabase and Feature Service Sync Optimization Patch so that empty feature datasets do not display for users that do not have access to objects within the feature dataset.