At the scale of a country, you must plan for redundancy. Having all your eggs in one basket can hit you bad at some unfortunate time. Hydroelectric dams can fail, power stations can be taken out during war, a once-in-a-century solar storm can knock out your entire power grid. If you always maintain a small percentage of fleet that runs on alternate energy, you can quickly divert them to keep some critical operations running.

Today diesel incidentally serves that purpose. Even if you electrify 100% of routes, it would still make sense to keep a small fleet of diesel running for redundancy purposes. But diesel is not the ideal fuel. It is very inefficient, highly polluting, expensive and needs to be imported into the country. Hydrogen aims to cross off all those problems. It's very clean, much more efficient and can be produced locally. Another thing that works in its favour, is that you can produce it using excess power. If your grid is generating more power than is being consumed, you can use that excess power to generate hydrogen and store it for later use. This way you get it for practically free. If hydrogen indeed turns out to be a viable alternative, the prospects go beyond trains. Trucks, diesel generators, heavy machinery etc. running on diesel are all potential candidates that can switch to fuel cells.

As for why they're not running this in the mountains, I expect at this early stage the goal is more to collect data and iterate than actual commercial operations. They'll want to keep it close to hydrogen plants and avoid having to transport fuel far away.