Feeling the water level just above the hairline is a kinesthetic cue that helps to effectively position the head. Since humans are better at processing visual information, visual cues are often more effective. Seeing both the pool wall and bottom within the field of view are visual cues that ensure an optimal head position.
This head position makes it possible to optimally orient the body when not breathing (minimize the body cross section), and breathe without distorting the torso and legs. An optimal nonbreathing head position forms a bow wave along the side of the head so that only minimal head rotation is necessary to breathe in the trough of the wave.
Find more information about the head position in an article on active.com.