The Illusion skill set is MENTAL in nature. Says that in game even. It is not OPTICAL. It is not smoke and mirrors. It's mental. Sure, a character that is blind can still attack you, as in comics and kung-fu movies. But this is not the same thing. The mobs are not blind. You haven't disappeared. You are controlling their minds to not see you.
You would never make a spell to trick the mind into not seeing you, but they can still hear you...perceive the air currents changing, and, thus, know where you are. It's mental. You perceive nothing of them. They're gone with not even a flash of smoke.
So even though the game says illusion is mental in nature, it treats "invisibility" as if you simply bent the light around. Like the "Predator" in the movie. As if it were optical in nature. As if we were David Copperfield, instead of Professor X.