Basically they'll randomly spawn in open spaces if you have a bounty on your head, with the chance increasing depending on the size of your bounty.
The chance is pretty small, so you shouldn't be seeing them often - and as with everything else you can increase or decrease the chance by means of a multiplier in the INI
As to the hunters themselves, they level depending on your fame and infamy. The more famous or infamous you are, the higher the likliehood of facing some rock hard bounty hunters. Of course the rubbish ones might still come after you too. They spawn in groups of 1-5, and their equipment levels with them instead of you. The higher their level, the more equipment options they have access to (and the more gol they might have. That doesn't mean that the highest level ones will all be kitted out with full daedric gear, just that there's a chance of them sporting some. There's also a small chance of a hunter wielding or wearing something disproportionately good, to simulate the idea that he or she might have made a smash and grab and gotten a good bit of kit some time.
Of course bounty hunting is illegal, so the guards and the public may actually end up helping you - even if you do already have a bounty.
They can be any gender or race, with very varied equipment, so you never know quite what you're going to get. I think they'll make a nice little addition to the game.