Fog of War is a level effect. Some levels have the fog of war setting on which makes objects on the level invisable until discovered by one of your followers. Once you have discovered a part of the world it will remain visible for the rest of the game.

You cannot see any other player's (including your allies) discovered areas, but you can see shadows and sounds of the objects that lay in the dark.

 

In some singleplayer levels, important places like stone heads will be uncovered from fog of war. Use a brave or two to roam and grant vision, or you could get a surprise atack from your enemy.

 

It is possible to know where the enemy settlement is by using worldview - you can see building shapes in the fog.

 

Sending cloaked spies can reveal your enemy's position without him knowing.

 

Online, people don't usually play with this option On, but many agree it woud be a good implement as it adds an intersting factor of strategy to the game.