I'm confused too!
Shadow Blend (Su): In any condition of illumination other than full daylight, a shadow mastiff can disappear into the shadows, giving it
total concealment. Artificial illumination, even a light or continual flame spell, does not negate this ability. A daylight spell, however, will.
Total Concealment: If you have line of effect to a target but not line of sight he is considered to have total concealment from you. You can’t attack an opponent that has total concealment, though you can attack into a square that you think he occupies. A successful attack into a square occupied by an enemy with total concealment has a 50% miss chance (instead of the normal 20% miss chance for an opponent with concealment). You can’t execute an attack of opportunity against an opponent with total concealment, even if you know what square or squares the opponent occupies.
Ignoring Concealment: Concealment isn’t always effective. A shadowy area or darkness doesn’t provide any concealment against an opponent with darkvision. Characters with low-light vision can see clearly for a greater distance with the same light source than other characters.
Although invisibility provides total concealment, sighted opponents may still make Spot checks to notice the location of an invisible character. An invisible character gains a +20 bonus on Hide checks if moving, or a +40 bonus on Hide checks when not moving (even though opponents can’t see you, they might be able to figure out where you are from other visual clues).
Edit: From the Hide skill description: "Total cover or total concealment usually (but not always; see Special, below) obviates the need for a Hide check, since nothing can see you anyway." Special: If you are invisible, you gain a +40 bonus on Hide checks if you are immobile, or a +20 bonus on Hide checks if you’re moving.
I'm still confused as to why it needs Hide...doesn't it want kids to know it's there, just not be able to pinpoint it?