Stealth is two-fold: A stealthy race is less likely to be attacked by aggressive mobs when a less-stealthy target also presents itself. A stealthy race will also succeed more often with rogue skills such as blackjack, backstab and sneak attack. Some examples of stealthy races include Drow, Halfling and Demonseed. Some examples of non-stealthy races include Giant, Troglodyte and Troll.
see also: Racial Stealth Modifier