Originally posted by Urban Blackbear:

There's two key pieces of info on the screen when you sneak. One is the eye, which tells you whether something has spotted you (full open eye), is looking for you (half eye) or is unaware of you (closed eye or just a line). The other is the noise meter which fills up with the more noise you are making. Either one can make an enemy aware of you. If you get spotted you have to break line of sight and be quiet for long enough for the enemy to "lose" you.

That's not a noise meter, it indicates how visible you are to other creatures as a function of detection range. At full a creature can notice you from their full detection range, at half the range is halved, at one-fourth... pretty sure you get the picture. The bar strength depends on your Sneak level and the current lighting (open in daylight, the bar will be as close to full as your skill rating will allow, plenty of terrain at night it will be as low as your skill rating will allow).