And Scent

Q: How do the Hide and Move Silently challenges vs Scent work?

By taking these skill challenges, you become undetectable by scent. Thus, creatures with that ability no longer automatically sense you when they come within a certain distance. They can however still find you via other senses (so they still get Search, Spot and Listen checks against you, as applicable to their situation). Due to the steps you have to take to negate their scent, you suffer a penalty on your check (the skill challenge). This could represent the fact that you had less time to find a hiding spot, or that you had to crush up some herbs to mask your scent (thereby giving a hint you were nearby) and so on.