Can you use it even when adjacent to an enemy that knows your there?
What kind of penalties would you get, or buffs would they get to try to see you?
Without getting into all the nitpicks of Stealth rules and all that, short answers are yes, and none. Hide in Plain Sight allows you to use Stealth even while being directly observed, without any cover or concealment being required. You make a Stealth roll vs any observers Perception roll. The advantage they have standing right next to you is simply that they don't take the -1 for every 10' of distance.
Note however that by RAW, Stealth is used as a part of movement, unless you're using the Sniping rule. So you can't just stand still and vanish, there has to be at least a 5' step involved.
Duplicate thread. Please discuss here.