AFAIK it suppose to make you undetected so the enemy need to search for you and in theory you should be able to do a sneak attack. This has never worked for me though
Edit: Dunno if it's bugged or i just don't understand how it works corectly
It says it will make distant enemies have to search for you (vs. knowing exactly where you are), yet you're upset that it doesn't make you undetectable to people 2 feet in front of you?
It isn't bugged. Read the description. It isn't supposed to work on enemies that can already see you. It causes distant enemies to lose track of you and start looking elsewhere which means they will lose you and drop combat mode meaning you can resume sneaking up on them for an easy kill. Used correctly it works extremely well.
What I typically do when detected is stay stealthed and use the roll to quickly put distance between the enemy and myself. As soon as I'm far enough away and out of sight I pop up and right back into stealth. The enemy stops following me instantly and starts searching and soon goes back on their normal patrol.