I've seen the vids online where people appear to be mist like and wonder what abilities/perks allow for this. I've played Mages, Battlemage, Conjurers, and most recently two handed warrior, but never came across this ability. Looks like its some kind of sneak/illusion type build but I cant find any perks onthe perk tree that seem to allow this.

What exactly is this? Looks so cool that I think I want to start a new character with this ability.

It's a shout called "ethereal", not a spell. There's also 3 potions that can give you that look too.

The three potions are going to be your best bet; the Become Etherial Shout is pretty much useless outside of preparing long-casting spells or avoid taking damage; it gives no sneak bonus, and stops once you make an attack.

The three potions are one-shot, and provide no bonus other than making you look ghostly.

That isnt it. I have the Ethereal shout. I think I may have found it - Shadow Warrior.

Its in this vid at the 50 second mark.
http://www.youtube.com/watch?v=fJsQehxW8OU&feature=g-vrec

Thanks.

It's shadow warrior. Did some digging around.

It only works, briefly, to stop combat (making you dissapear to NPCs.)