Sone Aluko's fifth goal of the season sealed the win and means Barnsley have now won only once in their last seven games.
"We were beaten by a better side. Especially in the first half, we couldn't match the opposition and gave the ball away too much," he said.
"We looked nervy in the first half and it did look like we had lost a bit of confidence - and that is not something I have seen before. But to get to half-time with the score at 1-0 gave us hope.
"The goal was self-inflicted to be honest. It's a misplaced header from John Stones and he's made a mistake, but he will get better and better.
"We could not get a foothold in the game in the first half. Their three midfield players dominated and did not allow us to get our strikers into the game.
"We did get the strikers into the game in the second half and we did better."
Hill has been linked with the Blackpool manager's job, and he concedes that he is flattered by the reports.
"I'm really pleased," he added. "It doesn't mean I'm interested, but I'm really pleased.
"It's very difficult on limited resources in the Championship where there's so much money swishing around. We have to develop players, and then we sell them."