Hill has led Wales before, having been co-captain with Ellis Jenkins for the 2018 summer tour matches against South Africa and Argentina.
Gatland says Hill was given the captaincy back for the final game of the season after careful consideration.
“We had a chat about what happened in the past and had a heart-to-heart about that,” said Gatland.
“Cory said to me he made a mistake three years ago and he regrets what happened. Young men do make mistakes.
“It happened, we had an honest discussion and Cory was very up front with me.
“I’ve been clear people do make mistakes in life, with some decisions or actions they wish didn’t happen.”
Gatland said he believes people must be given a second chance.
“You can’t keep holding everyone at ransom over that,” said Gatland.
“At some stage, you’ve got to move on and that’s what we’re trying to do as a group.
“It’s about putting that to one side and picking someone with that rugby experience and knowledge who has that respect from the rest of the players in the squad.”
Gatland said he was “not looking at the past but looking at the future” by giving Hill the captaincy role.
“He’s been brilliant in the group with that leadership and he’s been good for this young group of players,” he added.
“When you have someone with that sort of experience, people take notice of what he says.”
