Mob hate in almost any MMORPG (and other games) is based on several metrics, including distance, aggressiveness and in some games level difference. Let's explain these mechanics individually.
Distance
The most common metric is how far away you are from them. If you get too close to an aggressive mob, they will use this to decide it's time to put you on their hate list. Imagine a circle around each mob depicting this. If you enter this circle, they will chase after you. If you skirt just past it, they will ignore you as if you weren't there. This enables skilled players who through experience have learned to estimate these invisible circles to run past mobs unharmed by staying just outside their "aggro range".
Aggressiveness
This is a simple variable used in deciding when to attack, which can be zero, meaning the mob isn't aggressive and won't attack at all (unless attacked first). The more aggressive a mob is, the more they will ignore other metrics such as distance from player and level difference in order to decide to pick a fight with you.
Level/Power Difference
In some games, including TSW, this basically shrinks the above distance based on the power or level difference between the mob and yourself (most commonly levels are used, but sometimes other metrics, such as equipment or skill points are used instead or in combination, particularly in games without levels). This can go so far as to them not attacking at all unless attacked first, because you could wipe them out with one swing of your weapon.
That's the behavior you've observed in TSW. The basic premise is that an underdog wouldn't pick a fight with the local bully, but if the bully gets right into their face or starts shoving them around, they will have no choice.
Line of Sight
This adds an additional check for visibility. It's especially important in indoor environments. If a mob passes all the above checks for attacking you, but cannot see you because you're behind a wall or a big rock, they will not attack, even if you're right next to them, separated only by a rice paper screen. Earlier games often lacked this check as well as the chasing distance limit, leading to deadly but hilarious "train to zone" situations.
Hate List
The hate list is how games internally keep track of who to attack once a fight has begun, especially when multiple players are involved. Once a mob has decided (using above rules) to attack a player, the player is put on the hate list with a default "hate" value (let's say 100). This value is then raised or lowered based on the actions each player takes against the mob. For example, hitting them with a weapon might produce +10 hate, while stunning them for a few seconds pisses them off more, adding +25 hate. This hate list is then sorted by top hate, and the mob attacks whoever it has the largest hate score for.
This is also where the taunt mechanism comes into play, which will (depending on implementation) either add a large amount of hate, or simply put the taunting player above the top-most entry on that list (or it has no effect if they already are at the top).
Detaunts work the other way around, where they reduce the hate for a player, moving them further down the list, so others get attacked first. Some games even have abilities to remove a player from the hate list entirely, effectively allowing them to exit combat (e.g. the enchanters "memory wipe" line in Everquest).
Another subtlety of this is that you will have less hate or "aggro" if you pull a mob by just walking into their aggro range, as opposed to actually doing any damage to them. Experienced pullers will often take advantage of this in situations where the puller and the tank aren't the same player, to make it easier for the tank to pick up the top spot on the hate list.
Chasing
Once you are on the hate list and decide to get away from a mob, they will chase after you. Mainly to avoid exploits and long distance "kiting", this is limited in most games, either by distance a mob will travel in total, or more commonly by distance they will travel from their fixed spawn point. If they chase further than that, they will "reset" and run back to their spawn point. While they do so, they will often be in a special mode where nobody at all can attack them, and they regenerate health rapidly (to prevent players "tagging" them, or killing them without risk to themselves by staying just outside the chase limit).
