An Invisible fellow cannot be seen. Thus, everyone fighting the Invisible fellow is considered to have -9 Attack Skill while attacking them, and everyone the Invisible fellow attacks is considered to have -9 Defence Skill while being attacked.
An Unseen fellow is also Invisible, but only until they take damage. It should be noted that various Glamour effects such as Mirror Image, Blur, and Displacement can be applied while Unseen, but only work after their Unseen trait stops working.
Invisibility is a visual effect that True Sight sees through, just like Blur and Displacement (though unlike Mirror Image). The superior Sight Traits, Spirit Sight and Blind, can also ignore it. On another note, Invisibility penalties override those from missing eyes.
Outside of battle, a Stealthy fellow with Invisibility is extra-undetectable. Supposedly, a Patroller assisted by Spirit Sight (either on their eyes, from another fellow, or from spells like Earth Sense) should see through Invisibility here, but that isn't the case.