I know what you're thinking. But no, this is not about Cloaking Device.
Stealth mode is a flight mode that can be switched on anytime without additional device. When the stealth mode is activating, all the reactors were turn off. So the ship has to rely on battery left in the reactors or storage to fly.
You don't gain invisibility by doing so. However, you become undetectable as long as you stay in the fog (They cannot see the red dot). This would allow you to surprise attack ships without Sensor Array, making the fight more strategical.