It is a metaphor.
" shrouded" means forming a cover like a shroud or wrap in a shroud (which means concretely a burial garment, but anything that surrounds an object or situation can be referred to as a shroud of something.) .
"mist" is the thin fog condensed near the ground, it consists of a large number of tiny drops of water in the air, which make it difficult to see very far.
The picture is of a hill wrapped in mist or covered with it as a shroud , a cover , a wrap surrounding an object.