Non-redundant aperture masking interferometry with adaptive optics (AO) is a powerful technique for high contrast at the diffraction limit with high-precision astrometry and photometry. A limitation to the achievable contrast can be attributed to spatial fluctuations of the wavefront - those within a sub-aperture and across sub-apertures - and temporal fluctuations within a single exposure. Spatial filtering addresses spatial fluctuations within a sub-aperture. An optimized pinhole in the focal place preceding the aperture mask is one approach for reducing the variation of the wavefront within a sub-aperture. Similarly, a weak spatial filtering effect is shown to be provided by post-processing the images with an apodized window function, typically used to minimize detector read noise and contamination from wide-separated sources. We explore the effects of spatial filtering through calculation, simulation, and observational tests conducted with a pinhole and aperture mask in the PHARO instrument at the Hale 200″ Telescope at Palomar Observatory. We find that a pinhole decreases stochastic closure phase errors and calibration errors, but that tight restrictions are placed onto the alignment of binary targets within the pinhole. We propose an observation strategy to relax these restrictions. If implemented, the pinhole could potentially yield an increase in achievable contrast by up to 10%-25% in H and Ks bands, and more at very high Strehl (≳80%). We also conclude that correcting low-order wavefront modes within the sub-apertures will be key for reaching high contrasts with extreme-AO systems such as the Gemini Planet Imager and PALM3K to search for planets.