1. It should reduce the concealment provided by premonition (75%) down to around 40%... not positive if it does this in Layo though. Baseline premonition in NWN gives DR (30/+5, and absorbs 10 points of melee damage per caster level before collapsing)... not the case on layo (+2 Dodge AC, +2 Reflex saves and 75% concealment).
2. I also believe it should reduce the +2 attack bonus from HIPS creatures (but doesn't counter the sneak attack).
Specifics: This feat grants the character the ability to fight well, even if blinded or against invisible creatures. The character gets to re-roll its miss chance percentile one time to see if it actually hits. Furthermore, invisible creatures get no bonus to hit the character in melee.
This feat effectively squares the effect of all concealment (reducing 50% to 25% and 10% to 1%). Furthermore, it negates all attacker miss chances (e.g. from blindness or darkness).
The "ability to fight well" includes negating the -4 to attack rolls that is normally incurred when fighting blind. However, this feat does not negate the -4 to attack rolls against invisible creatures.
The bonus to attack that invisible creatures normally get is +2. This same bonus is also normally given to creatures attacking a blind creature. Both sources of this bonus are negated when the target has blind fight.
This feat affects both normal and touch attacks (though the modifiers to attack rolls that this feat negates are never applied to touch attacks).
This feat prevents one from being caught flat-footed by a hidden melee attacker, provided the attacker is heard. (If the attacker is spotted, the defender can avoid being flat-footed without this feat.) It does not, however, negate any other condition for being caught flat-footed.
This feat does not protect a character from sneak attacks by an unseen (hidden or invisible) opponent (even if being unseen was the only factor permitting the sneak attack).