Ok so let this one break it down to what this Khajiit has learned... (from the 1.6 patch Justice system overview via the ESO Live video today 05.12.2014)
Replay link starts at 1:07:13
YOUTUBE LINK starts at 57 mins
Kotaro's Guide on Crime

1. You can toggle the Justice system on and off, but if you have a bounty/heat, you cannot toggle it off unless you clear the bounty/heat first. The default will be ON. (So those that like to spam AOE's in town's, make sure that after the patch you immediately turn the justice system OFF when first logging in)
"Kotaro advises his fellow Nightblades to remember that the Path of Darkness is a AOE and will hurt others, even if you are using it for only speedy purposes"

2. You will accumulate bounty/heat if you engage in illegal activities. If your bounty/heat is very high you will not be able to access the vendors, merchants or the bank. (You can use Fences though). Stolen items cannot be sold to vendors or traded amongst characters only sold to Fences.
3. There are three levels of Heat, (you will have a little circle in the bottom right corner that will fill as you commit crimes.)
1/3 The guards might accost you if you are too close.
2/3 The guards will accost you and require a bounty.
3/3 You will be killed on sight.
Bounty/heat will decrease over time as it is global, so you could go on the Lam and hide out for awhile (a place without guards) and wait for your heat and bounty to decrease. If you pay your bounty, you loose all stolen/illegal items in your possession and it clears your Bounty/heat. If you fight a guard and die, your stolen/illegal items will be removed and your Bounty/heat will be cleared.
"This one thinks sometimes there are very good reasons to hunt and kill monsters out in the wilderness, maybe the guards will not recognize this Khajiit after some time."
4.Guards will be UNKILLABLE, they can be stunned or rooted, etc.. but they will not be able to be killed, so you can escape from them but you cannot kill them.
"This one speaks to his Fellow Outlaw Nightblades, Shadow Cloak and Veiled Strike are your friend, STUN and RUN"

5. They are introducing a skill line, Outlaw (or some similar name), that will help you steal and use pick pocket/pick locks, etc.. and as you pick locks / pickpocket people, you will get better over time (experience doing these illegal activities will increase your skill). You will have passives to put points into that will help you steal, etc.
Being behind a person to pickpocket will increase your chances to pick pocket a NPC.. also, you will be able to see your sneak eye and it will tell you when you are hidden or detected while performing illegal activities ..
Take advantage of NPC actions to steal from them, for example, in the ESO live video a Orc was drunk and was throwing up and the thief behind him kept stealing from him.
"Getting skilled in theft will make you money...No?"
6. There will be Fences in the game (in Outlaw hideouts) that you can sell or clear a stolen item to become normal and you can pay your bounty (at a decreased cost, it looked like on the video) to the Fence. Also take note that Fences will only take so much contraband (stolen items) as their heat goes up as well. (So you will have to travel around to different Fences if you have a lot of illegal items to sell )
"Kotaro thinks that we will need to mark these fabulous places on our maps.. yes.."
7. They will be adding houses and places in the game that you can break into, you will need to pick the lock on the door to enter, people will most likely be inside of these houses/Area's and there will be a safe/chest that valuables will be inside of, most likely hidden. The people inside these houses, if they detect you, will eventually call the guard if you do not leave. The place will also effect the gold amount of the loot that it will give you and the type of loot that will be found, for example, in a palace you may find an expensive necklace and in a rundown house you may find a low gold antique. What you see is what you get, steal a sword, get a sword.
"Kotaro advises you work on your skills and then when you feel you are skilled enough, go to a palace and procure some items, make sure you mark and know where your exits are for a quick getaway...yes.."
8. Murder is a capital crime and your heat will increase quickly, you will be able to loot a dead person's body. If you have stolen from the person previously, you will get less off that person's body in loot. Bystanders and witnesses will call for the guards to come and if you are in the area with any loot on you, you could be accosted. A bow sniper with the right shot could get fellow thieves caught in the area. (this could be a future way to grief other thieves in the game)
Killing shop keepers and quest givers, characters needed to further the game, will most likely not be possible (so you cannot give grief to other players).
"Kotaro thinks this is very interesting, as even if you did not commit the crime but you have Bounty/heat and are in the area you could be in trouble..this could cause major chaos...No..??"
Animals will not be witnesses to a crime, NPC people will act different though in view of a crime, one may run, another will yell for the guards and another my attack you, etc...
Killing livestock, chickens, etc.. will raise your bounty. Killing the witness to a crime looks like you will still get a bounty for it unless you one-shot them.
There are currently no jails at this time.
There will be achievements for the Justice system, no information provided at this time.
Update (forgot to add)-
The npc AI has been upgraded and some npc's will now perform activites such as sleeping, cleaning their house, taking walks and many other activities. A npc could be sleeping in their home one moment and the next moment they could wake up and take a walk around town, down some secluded alley, go to the tavern for a drink, or go fishing in the nearest body of water.
"This is currently all this one has information on that this Khajiit can currently remember.
So good luck and may you always walk on warm sands."
Kotaro Atani
VR14 Nightblade and future Thief.
Signed,
Kotaro Atani.PS5 NA
VR16/ CP 160 Khajiit Nightblade of the Aldmeri Dominion, Guildmaster and Assassin of the Queen's Hand guild on NA PC. PvP Officer in the WOLF guild on NA PS5, and of course Master Thief. Currently 3600 CP out of 3600 CP on NA PS5. Currently 810 CP on NA PC (used for PTS testing purposes only). On PS5 I am also a Master Crafter, all traits done and learned, Jewelry crafting done. all Motifs learned on PS5 except for maybe two-three Motifs. All Companions are Max level as are their Skills.Warrior, Lover, Thief.... Nightblade. Aldmeri Dominion For Life! For the Queen!! Go Dominion or go home ! "I have no hatred for the races of Man, but they are young. Like all children, they are driven by emotion. They lack the wisdom that comes with age. I would sooner place an Altmer infant on the Ruby Throne than surrender Tamriel to their capricious whims. The Altmer, the Bosmer and the Khajiit share the common traits of intelligence, patience and reason. We do not seek riches or plunder. Domination is not our goal, nor is the acclamation of power for its own sake. Today we make our stand. Today we take back the Ruby Throne, which is ours by ancient right and the blessings of the Divines. Stand with us." ―Your Queen Commands, Ayrenn Arana Aldmeri.(All 18 characters are AD only! This one is a AD Loyalist)Member of ESO Since January 29, 2014, started early Access 3/30/14 on PC, currently subbed on NA PS5 and on NA PC. Note- I only use PC for PTS testing purposes, the PS5 is my dedicated Game Platform.Note- for those that don't know how to say Kotaro Atani it's "Ko tar row Ah ta ni" (Ko with a Oh sound, tar which sounds like the sticky black tar stuff, row like rowing a boat, Ah with a AHHHH sound, Ta with a Tahhh sound, Neeee which sounds like knee)"The blowing sands of time wipe clean the footprints of the past...""Moonsugar may be the key to paradise, but it is through a false door...""A perfect society is always elsewhere..."- Unknown book of Khajiiti proverbs.