If an NPC see's you commit a crime he will either report you, fight you, or not care.
Fees for stolen items are more based on what you stole, so you won't get nailed for stealing a fork, but will for say, murdering somebody.
To commit a crime, someone has to see you do it and know it was you, so if some drops from an arrow, the people enarby won't necessarily know it was you, and if a body is never found people may never know they were killed.
If you choose to be arrested you have to choice of either pick-pocketing a guard, picking your way out of prison, or sleeping it off and losing a skill point.
If your crimes are reported, your infamy will go up, infamy is linear with fame, fame making good people like you, infamy making more mysterious people like you.
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A man once asked the Buddha, "How does one escape the heat of the summer sun?"
And the Buddha replied, "Why not try crawling into the blazing furnace?"
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