I am not a math wiz but i figure that each level into a multilevel perk will take from the remaining pool.
ie; sneak-stealth
100% chance at detection at level 0.
80% at level 1
64% at level 2
51.2% at level 3
40.96% at level 4
32.77% at level 5.
So at the 5th level of Stealth, you only have 32.77% chance at being detected?

Nope. All instances work from base values. It's the reason Enchanting is so broken right now, especially combined with Smithing.

I believe someone said that all boosts are based on baseline skill level.

and this applies to all multilevel perks?
stealth at 5th level is 100% not able to detect?

I don't think it has diminishing returns. Instead I think its a modifier to your effective sneaking skill.

The point is more that you're wrong in assuming that 0 perks in sneak = 100% detection rate.

I do not know the exact mechanics of this specific perk so I cannot say. In Oblivion your "chance" of detection was actually a range value and if you went into line of sight within this range you would be detected. It may or may not be the same mechanic in Skyrim.

It may be a modifier for your Sneak skill by that amount in calculations. So someone with 5/5 Stealth and 50 skill in Sneak would have the same ability as someone with 0/5 Stealth and 100 skill in Sneak. Again this only my theory.

Yes i mean to add that this is while sneaking out of LOS.
not that 5th level stealth makes you invisible.