Cadfan said:
If I cast Dusk and Dawn, granting myself partial concealment relative to all opponents (who don't have darkvision), I still need Hide in Plain Sight if I'm currently being observed. Otherwise, I can attempt to make a bluff check to create a distraction, if successful, I can move around freely within the shadowy illumination, remaining unseen as long as my hide checks are successful.
Well, let's see:
1. You cast Dusk and Dawn, creating an area (20 ft. radius) of shadowy illumination.
2. Shadowy illumination gives you concealment against all opponents who have no means (e.g. darkvision, an active
true seeing spell etc.) to ignore the shadowy area.
3. Concealment is a prequisite to use the hide skill, thus you may attempt to hide now, as long as you are not being observed (even casually).
4. If you have the Hide in Plain Sight feature you may even try to hide while being observed. Otherwise you could try to create a diversion (Bluff check against the opponent's Sense Motive Check) and, when successful, may try to hide now.
5. As long as no given opponent beats your hide check with it's Spot check you are hidden (= have total concealment) and can move around the area of shadowy illumination at half speed or normal speed (-5 penalty to hide check), while running, attacking, charging etc. would impose a -20 penalty to your hide check.
Cadfan said:
If I am in bright sunlight, and I cast Dancing Shadows, I am completely unseeable. I have total concealment from all opponents. I need not even make hide checks? I am not so sure about this one. The SRD says that total concealment "usually, but not always" makes hide checks unnecessary. I suppose it is up to the DM to decide when this is the case? The SRD says to see the "Special" section below, but that section does not discuss this issue.
Okay, I have to admit the descriptive text of the
dancing shadows mystery seems quite vague at first glance. However after taaking a deeper look at the mechanics behind total concealment and the somewhat confusing
"usually, but not always"-clause given in the description of the hide skill, things look less complicated
In game terms total concealment means your opponent has no line of sight to you, only. If she has other means to discern your rough position (e.g. successful Listen check or knowing you're somewhere within a 5-foot area totally concealed by absolute darkness), she may
guess your position and attempt an attack with a 50% miss chance (the 50% miss chance being the actual main benefit of total concealment, as there's nothing
physical between you and your opponent, which could prevent a hit - As mentioned above: it's all about sight only!).
There are three major kinds of total concealment you can benefit from:
1. Something directly affects your opponent's [biological] ability to see you (e.g. your opponent is blind). You do not have to make a hide check against that opponent, because he does not have the option of
seeing you available to him anyway, thus being forced to
guess your position at all times.
2. Something affecting the area around you / your opponent hinders your opponent to see you. (e.g. in a pitch black room, deep underground without any means of even faintest illumination available, your opponant may try to spot you as hard as he wants, but he cannot succeed, because even the best spot check doesn't provide you with the biological or mystical ability to see in complete darkness.)
In that case you do not have to make any hide checks, either. The opponent may
guess where you are, but under no circumstances he can actually
see you!
3. Something affects you only, but not the surrounding around you (e.g.
invisibility).
Your opponent can't see you, but the surrounding area may give hints to your exact position (e.g. by leaving footprints in the mud or displacing water while standing hip-deep within a lake). In that case, you
have to make hide checks (gaining a bonus to the skill-check, however), because by observing your surroundings your opponent may be able to pin-point your exact position by means of a successful Spot check. (Btw. that actually was the major exception the
"usually, but not always"-clause was all about.) If the spot check is successful, you don't benefit from total concealment against that opponent this round (next round the same procedure starts all over again). If the Spot check fails, your opponent may guess your exact position only and thereby has the usual 50% miss chance to hit you.
Now let's take a deeper look at the
dancing shadows mystery. When cast at a single target, the mystery sort of
deepens the shadows around the target, giving the creature total concealment (imagine a bubble of pitch black shadows constantly shifting around you in your square). As the shadows (= area around you) are affected, an observer has no chance of discerning your
exact position, however as only the immediate area around you seems to be affected at any given moment (instead of a larger [e.g. 10+ ft.] area around you),
guessing your position should be possible in most circumstances. You do, however, always benefit from total concealment (= 50 % miss chance, no AOOs against you) without having to make any hide check!
Oh, by the way I'm not sure, if you could cast a mystery in bright daylight anyway

In the "Mysteries and Paths" section (Tome of Magic, page 138) it says:
[Mysteries] function in darkness or any sort of ambient light [...], however it further states:
[...] he can manipulate a subject's "spiritual shadow" even where shadows cannot normally exist.
Well, that's quite confusing... What does "ambient light" mean? And can't a mystery user cast any mysteries in areas of brighter-than-ambient light, although he manipulates "spiritual shadows" only?!?