I cast silence around the area of the cracked wall in the goblin fort before I hit it with a melee weapon, but the goblins nearby still woke up and complained about the noise. I also used silence on the area of the dwarf who was chilling outside the paladins/fiends in the tollhouse before trying to stealth kill him, but the people inside the building, when the door was closed and silence was cast, still heard the combat and joined the fight.
The silence spell should have an affect on these situations, as it blocks out all noise in the radius.
