This is an odd one. Up until the Thalmor Embassy, I was sneaking around happily, getting right up under peoples' noses, all the usual "Skyrim sneaking is broken as heck" stuff.
Then, while I was in the embassy, I noticed that the guards were spotting me easily. The guards inside the embassy spotted me the moment I was in their line of sight. The guards on the way to the interrogation chambers spotted me from clear across the snowy courtyard. Then I got through the next area without being spotted, and easily managed to evade detection while creeping up on people, so I didn't think much more about it.
I've now played a little further into the game, and I'm now absolutely certain that sneak mode is doing nothing to lower my visibility any more. I've done some testing standing at the edge of enemy characters' visibility/hostility ranges, watching them change stance as they see me, shouting insults at me to make me go away, that sort of stuff, and it's clear that my detection distance while sneaking is exactly the same as my detection distance when not sneaking.
I've read about an animation glitch that can lock players into standing mode and that sitting in a chair can break them out of an animation bug. That isn't happening as far as I can tell. Sneak is definitely engaging, the "Hidden" icon appears, the eye opens if I'm seen, my walking speed changes, all of that and if I can get a long bowshot to hit, I'll still get my sneak multiplier.
What I can't do is actually become less visible by sneaking.
I've tried clearing the state by standing, sitting, and using all kinds of interaction objects but no dice. The world of stealth is currently lost to me.
Is this a known bug? Does anyone know of a way to clear this status?
If not, I'm going to have to dump back to an older manual save and that's going o lose six hours of gameplay I'd rather not have to repeat.
EDIT: Actually, thinking back to the events in the Thalmor embassy, I suspect that I might've overflowed my sneak value, sending it to -255, or whatever.
I now remember a moment in the embassy, just after I'd gone through the kitchen and gotten my gear from Malborn, where I was sneaking around upstairs and almost ran into the Thalmor wizard who wanders around that building. I was within a foot or two of him, with him looking directly at me, and he still didn't see me. I wandered away and I think I remember my Sneak skill levelling up again at that point.
I next met the wizard as he was coming back up the stairs and he spotted me from a long way off; at that point, I hadn't started looking for sneaking problems and just shrugged it off, but that was actually a massive change in his behaviour, given that I'd almost smacked into him without being noticed only a minute or two earlier.
Similarly, the guards downstairs began spotting me the moment I walked into their lines of sight. The thing is, I had avoided their gazes completely up until that point, so it was the first time they could have seen me, so I assumed it was simply a feature of the mission (given that many points are made in conversation about the need for stealth and secrecy).
I'm off to work now, but I'll test things again when I get home.
I suspect that I'll find that night doesn't help me at all (because my sneak value will still be deep in the negatives), but throwing on a suit of heavy armour will probably reduce my sneaking skill enough that my effective sneaking value flows back under the overflow point and I'll start sneaking properly again.
I'll report back later.