I wish to know EVERYTHING about Oblivion law and such, please inform me.

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.

If someone attacks you first you can not be arrested for killing him