I've equipped Cait with a stealth chest piece. In sneak mode, I can still see her. But I can't tell if NPC's can see her or not.
Yes, companions do benefit from the effects of armors with the 'Chameleon' legendary effect. Below is an image from a Reddit post showing Piper with the chameleon effect.
This is also supported by a note on the Legendary effects page of the Fallout Wiki.
There seems to be a couple of potential bugs reported with Chameleon on your companion.
- Per the Fallout Wiki page:
Furthermore, it works on companions as well, although the effect will simply stop working fairly often with no apparent reason and no reliable fix, somewhat limiting its usefulness (especially given most companions' unpredictable sneak behavior). Unequipping and re-equipping a chameleon piece from a companion's equipped inventory fixes their chameleon armor's effect.
- Some users, such as this one, have reported that even after taking away the pieces with chameleon, their companion will go invisible when stationary and crouching.