Use the skill. If successful, other characters will not be able to see you as long as you remain immobile, take no offensive actions, and you do not say anything. Success depends on skill level and the amount of cover available.
Gideon's Advice: Hiding is an incredibly useful skill to have as it allows you to leave your character AFK in many situations. On characters I play a lot actively and on resource gathering characters I usually GM hiding right away and it is the last skill I drop once I'm skill capped.