Hmm, actually it doesn't look like it does work. In fact, it may be worse than Lemmy. I can see @saltywizard@beige.party's hashtags (as actual hashtags) in Lemmy, but not here on Piefed.
But I can't see my own hashtags in either platform.
edit: wait, looks like both Lemmy and Piefed may work. I can see saltywizard's hashtags as tags on the default Piefed UI, but not in Blorp, which is my preferred Piefed client.