sudo does not hide input completely because of an alleged security benefit, but because it is much simpler to do in the context of a Unix terminal. A Unix command-line application normally receives user input by whole lines (nothing is sent to the application code until you press the "Enter" key); hiding the input is only a matter of telling the terminal not to display the typed characters, with a
tcsetattr() call (e.g. see this answer). To display stars for each entered character,
sudo would have to do some more complicated things, i.e. set the terminal in "raw" or "cbreak" mode (see this page for some details);
sudo would then have to implement line-editing itself (handling of backspace key, or Ctrl-U to clear the complete input, for instance).
Although completely hiding the input hides the password length, this information is still available to bystanders, who can use their ears instead of their eyes: instead of counting the stars on the screen, they can count the key presses. Therefore, the alleged security benefit of complete hiding would be, at best, very slight.
Displaying the stars makes a much better user experience, in particular people with slightly flaky keyboards, where a keypress can be "lost", or else involuntarily duplicated.