Whether an absence can be entered by hours depends on the calculation type set for that absence. This applies both to entries made by administrators and to employee requests.
You can change the calculation type in Settings > Event Definitions > Absences: select the absence, under Absence Calculation Type select Whole Day Absence with partial option, and save your changes.
Then enter the absence on the timeline using the Add absence button: in the dialog, clear the All day checkbox and enter the start and end time of the absence.
