|The following is based on Van Buren and has not been confirmed by canon sources.|
This skill is used in dialogue, but it is also used as a limited building skill as means to an "alternate" stealth route. As with Speech in Fallout, Deception is checked in dialogue along with stats. But Deception's dialogue options all take the form of bluffing, misleading, or otherwise flat out lying to the other person in the conversation.
Deception can also be used to "sneak in plain sight" through the use of disguises. Disguises can be either found or created with a Disguise Kit. A disguise is a single item that a character wears, though it may occupy several equipped slots when necessary. Disguises may include things like: NCR Ranger Outfit, Hubologist Outfit, Viper Raider Outfit, etc. When a character uses a disguise, the character's effective reputation and identity become invisible. As far as AI is concerned, the character is part of that disguise's "team" as long as the NPC's PE doesn't see through the character's Deception skill (affected by range, lighting, etc.). Of course, for practical/gameplay purposes, a character's disguise does not hold up once he or she enters combat or attempts to initiate dialogue. And some disguises just don't work for some characters (no super mutants in BoS Scribe disguises, no humans in Night Kin disguises).
Characters can also manufacture disguises from individual disguise elements through the use of a disguise kit. Placing all the elements of the intended disguise into the kit creates the disguise if the character's Deception skill is high enough. E.g.: Joe wants an NCR Ranger Outfit. This requires an NCR Ranger uniform, NCR Ranger boots, and an NCR Ranger pin (I love that pin). He finds the uniform on a dead Ranger, buys the boots at a surplus store, and trades for the pin with a group of unpleasant but businesslike raiders. Dump them in the kit and -- voila -- NCR Ranger Outfit.”— J.E. Sawyer