I just can't wrap my head around why pressure decreases as velocity increases.
That's somewhat backwards. That makes it sound like a decrease in pressure is caused by an increase in velocity, when it's more that an increase in velocity is caused by a decrease in pressure. If there is a pressure differential, that means there is a net force on the fluid, which means the velocity increases.
From a conservation of energy point of view, higher velocity means higher kinetic energy, and that energy has to come from somewhere. One place it can come from is the internal energy of the pressure.
One explanation for how wings generate lift is that the air above the wing is moving faster, which causes lower pressure, but that explanation is incomplete: the wing is exerting a force on the air, which means that the conservation of energy argument doesn't work. 621
<PERSON>'s principle allows us to infer a decrease in pressure from an increase in velocity only when the internal energy of the pressure is the only possible source of the increase in kinetic energy.
but when the finger blocks the hole, wouldn't that add extra pressure on the fluid?
When you talk about something being "extra", you need to be clear about what's it's extra with respect to. If you put your finger on the hole, the water next to your finger isn't at a higher pressure compared to the water elsewhere in the hose, but it is at a higher pressure compared to what it would be if you hadn't put your finger there.
Without your finger, the water starts out with some high pressure from the water company, and the pressure decreases as it flows through the hose. At the moment it comes out of the hose, it has little pressure, so the transition from just inside the hose to just outside the hose doesn't involve much decrease in pressure, so the velocity doesn't increase much.
When you put your finger on the opening, the water retains most of its pressure throughout the hose. So now when it exits the hose, its pressure decreases significantly, and its velocity increases. 1018