It's working as intended. Whether or not you enter combat immediately depends on the lighting. When you are sneaking, various areas where you move your cursor have circles above it filled to varying amounts.
Um, no.
That icon has absolutely no bearing on my results.
The indicator you are referencing (Sun icon) has been full spectrum on my testing and zero consistency on everything I have described above.
The checks (if any) are sporadic and never occur in any specific pattern.
Not working, and if is as you say "intended"....than totally borked.
