Before picking it up it is a round glowing ball similar to overshield and custon powerup but is a faint blue color. This changes your players look to resemble the background it is against. Although you are invisible you can see the faint outline of the person and are still seen on the radar.
 Tactical uses
Obviously, there are blatant uses for invisibility, such as sneaking in behind enemy lines or grabbing a sneaky assassination on the enemy team. It is also of grave importance in an objective gametype. In previous Halos, the Active Camouflage was always a power up or an equipment to be found on the map. This always meant that someone had to have a specific role involving the camouflage. Say, someone would grab both the Shotgun and the Active Camouflage and be a complete nightmare in the enemy's base because they would be invisible and wielding a really powerful weapon. This was the way in Halo 1, Halo 2 and Halo 3.
However, in Halo Reach, the game plan has changed entirely. The Active Camouflage is now an armour ability that can be used in conjunction with your loadouts. This means that it is no longer a matter of who gets the Active camouflage, but more a matter of who has it on their class. You can imagine that with some careful planning, you could wreak havoc on a team if you confused them with an entire team of stealth camouflaged players. Combined with the new radar jammer aspect of the armour ability, you have a force to be reckoned with on your hands. Now the Active Camo is an option instead of a powerup, more people will certainly use it.