I have spent some time reading over the various posts in this thread. I returned to the official rules printed in the books and on the Pathfinder SRD website. I quote the passages directly along with page numbers.
Copied and pasted from Pathfinder SRD website:
Hide in Plain Sight (Ex)
Prerequisite: Advanced talents
Benefit: A rogue with this talent can select a single terrain from the ranger’s favored terrain list. She is a master at hiding in that terrain, and while within that terrain, she can use the Stealth skill to hide, even while being observed.
Special: A rogue may take this advanced talent more than once, each time selecting a different terrain from the favored terrain list.
Copied and pasted from Ultimate Combat p71
Hide in Plain Sight (Ex): A rogue with this talent can select a single terrain from the ranger’s favored terrain list. She is a master at hiding in that terrain, and while within that terrain, she can use the Stealth skill to hide, even while being observed.
Pay special attention to the above and you will notice a recurring theme. Hide in plain sight allows you to use the Stealth skill even while being observed.
Copied and pasted from Pathfinder Core Rulebook page 67, Ranger class ability
Hide in Plain Sight (Ex): While in any of his favored terrains, a ranger of 17th level or higher can use the Stealth skill even while being observed.
Again, the same thing. “even while being observed…” there is nothing here about not needing concealment.
Copied and pasted from Pathfinder Core Rulebook, Shadowdancer class ability
Hide in Plain Sight (Su): A shadowdancer can use the Stealth skill even while being observed. As long as she is within 10 feet of an area of dim light, a shadowdancer can hide herself from view in the open without anything to actually hide behind. She cannot, however, hide in her own shadow.
Note that it still says even while being observed….as long as you are within 10 feet area of dim light (ie shadows, darkness, CONCEALMENT). The next part is very important. There is a subtle distinction that some people are missing. “Hide behind” means to use cover to hide. It says right in the Stealth skill that you can use cover or concealment. This is just saying that the Shadowdancer needs only a bit of shadow to CONCEAL themselves.
Copied and pasted from Pathfinder Core Rulebook Stealth skill:
If people are observing you using any of their senses (but typically sight), you can’t use Stealth. Against most creatures, finding cover or concealment allows you to use Stealth. If your observers are momentarily distracted (such as by a Bluff check), you can attempt to use Stealth. While the others turn their attention from you, you can attempt a Stealth check if you can get to an unobserved place of some kind. This check, however, is made at a –10 penalty because you have to move fast.
Above is the reference to concealment and the Stealth skill.
Copied and pasted from Pathfinder Core Rulebook page 197
Concealment and Stealth Checks: You can use concealment to make a Stealth check. Without concealment, you usually need cover to make a Stealth check.
Ignoring Concealment: Concealment isn’t always effective. An area of dim lighting or darkness doesn’t provide any concealment against an opponent with darkvision.
This means that you must always have either concealment or cover to use Stealth. If you are using shadows and/or darkness as concealment then it is not effective against opponents with Darkvision.
I would actually like to see an official ruling on this. If someone from Paizo could either make the ruling or post a link where it could be found, I would appreciate it.