Stealth is avoiding detection. It's most effective for completing side missions.
A suppressed pistol (each faction has one) will always kill in a single shot if you are undetected. If you're in a firefight, a suppressed pistol will have a very low kill chance. You can also press the melee button (default V) to instantly and silently dispatch foes.
If you are within the sightlines of an enemy, you will be harder to detect if you crouch or even harder if you go prone.
Other factors that affect visibility include the day and night cycle as the overall visibility of the AI is reduced at night. If a sector is alerted, the AI will have a greater detection range. A sector is alerted when hostiles have been seen or heard in the area.
Those factors are especially important, when you want to take a stealthy approach. A prone soldier with a suppressed weapon, at night in a non-alerted location will be the hardest to detect.