This hadith can basically be explained by a hadith qudsi which was compiled by abu Dawod, an-Nasa'i (in his Sunan) and at-Trimidhi (in his Jami'):
When Allah created Paradise and Hell-fire, He sent Gabriel to Paradise, saying: Look at it and at what I have prepared therein for its inhabitants. The Prophet (pbuh) said: So he came to it and looked at it and at what Allah had prepared therein for its inhabitants. The Prophet (pbuh) said: So he returned to Him and said: By your glory, no one hears of it without entering it. So He ordered that it be encompassed by forms of hardship, and He said: Return to it and look at what I have prepared therein for its inhabitants. The Prophet (pbuh) said: So he returned to it and found that it was encompassed by forms of hardship (1). Then he returned to Him and said: By Your glory, I fear that no one will enter it.
He said: Go to Hell-fire and look at it and what I have prepared therein for its inhabitants, and he found that it was in layers, one above the other. Then he returned to Him and said: By Your glory, no one who hears of it will enter it. So He ordered that it be encompassed by lusts. Then He said: Return to it. And he returned to it and said: By Your glory, I am frightened that no one will escape from entering it.
(1) The Arabic word used here is "makarih", the literal meaning of which is "things that are disliked". In this context it refers to forms of religious discipline that man usually finds onerous. It was related by Tirmidhi, who said that it was a good and sound Hadith (also by Abu Dawud and an-Nasa'i)
(Source: 40 Hadith Qudsi).
this is basically what imam ibn Hajar made in his fath al-Bary the commentary of the hadith in Sahih al-Bukhari.
Imam an-Nawawi in his commentary on the hadith in Sahih Muslim said: One can only access Jannah by performing what is widely considered as hardship (like doing efforts in worship and keep straight and stick it, being patient, doing good deeds, sadaqah, restraining anger, pardoning others, being good to people who wronged you etc.).
While access to Jahanam basically is easy, you just need to follow your nafs and desires that's why the term temptations was used.
Imam an-Nawawi made clear that the seemingly meaning of temptations is to refer to all kinds of things which Allah has forbidden like alcohol, zina, looking at foreign women, ghaybah etc. while the permissible desires are excluded, but it is frowned upon to be excessive in them.
So one could say that Jannah (Paradise) and Naar (Jahanam or Hell-Fire) have been concealed or disguised so that blind people would easily fall for the first impression. On one side you see anything that you might want to do, but behind the cover or skin you may find Jahanam while on the other side there's everything your nafs would reject or find excuses to avoid, but behind this skin or cover there's Jannah.
