i usually use invisibility sneak up on a guy and just press action animations are all different depending on my positioning vs the target
Yeah, I love my war hammer hehe that final blow move hehe. Its nearly jizzafying!
I've used it with Daggers, haven't tried a sword though it may work also. I just sneak up behind and aim my cursor at the back of their head and hold the left mouse button (power move). However, I haven't been able to steath-kill anyone while they are sitting in a chair, could be physics or could just be I messed up the mouse click. But, to precisely answer the question, Sneak/Invis and Power Move your main-hand "dagger?" while they are unaware of you nearby.
This is pretty much correct. However, from what I can tell, the person you do it to cannot be doing any form of idle animation (eating, sweeping, working, etc) or you'll just do the standard slashing animation.