Precision

Functionality before Update 14
Precision grants +4 on to-hit rolls and bypasses 25% fortification, but damage is halved. Base damage is halved (including damage from Sneak attack), but elemental, burst, and alignment based damage is not.

''There is currently a display with Precision when making Sneak attacks. This has been confirmed by a Dev and will be fixed in an upcoming update.''

Note: In this specific case, base damage is 2.5 times higher with Precision, ignoring critical hits (you hit 5 times more often, but deal only half damage).
 * Even though the base damage is halved, Precision can increase your overall damage due to hitting more often, both from the additional weapon damage (elemental, etc.), and in some cases from even higher base damage.
 * The base damage increase is the greatest on monsters that require a 20 to hit without Precision, but require only 16+ to hit with Precision.
 * Precision can be useful to land more critical hits, if you have a weapon that has special effects on a critical.
 * Precision decreases base damage against extremely high AC monsters that still require a 20 to hit with Precision. Instead, use Power attack against these monsters.
 * Precision decreases base damage against medium to low AC monsters, as the +4 to-hit does not compensate for the base damage being halved.
 * Precision is less effective on monsters with Damage Resistance.
 * Consider using it when you have a limited supply of high-damage projectiles (such as Dragon-bane arrows) and don't want any to be wasted.

See also:
 * Tool to determine if taking Precision will increase your total damage.