Night-Eye is an Illusion effect which causes the target to longer be affected by shadows and lighting conditions. For the PC this shows visibly by casting the game world in a bluish hue which makes darker areas much more visible. Since the effect casts everything in blue light, colors are no longer visible with this effect on, making some normally easy to spot items much harder to pick out, such as Potions and Nirnroots.
The most useful spell in this category is void gazer, which is sold by M'raaj-Dar. It is a lot cheaper to cast than any other night eye spell in the game, and lasts a lot longer. It lasts for 150 seconds and costs 54 magicka.