We all know that language says a lot about culture. I like it that DLHawaiian has introduced this so early in their syllabus. English speakers are unfamiliar with the concept (formalized in language) 'you and I together', "all of you & I" , "you two but not including me" "those two not including you or I" and more. Relationships are very important in Hawaiian culture and specific ways of talking about relationships have been incorporated into the language.
In fact, it doesn't mean "Hello" at all! The closest literal translation would be more like, "Peace and love between us two." But that's not really something we say in English. Neither do we say, "Hello between us two," in English. At those times where a person greeting someone in Hawaiian might say, "Aloha kāua," an English speaker would be more likely to say just, "Hello!" So while it is a terrible literal translation, it is an ideal substitution between the two languages and that is what Duolingo is trying to teach here.
In ʻŌlelo Hawaiʻi the relationship between speakers is very important. There are words for us two, those two, a group of equals, a group greeted by a kumu etc. a group you are to a part of etc. English protocols for greetings do not translate well. In fact many Hawaiian words do not really translate into English as they are not "English" concepts.