One of my players just bought into this tree and we were wondering how the power actually works. Does it affect the mind of your opponent? or are you somehow cloaked by the force and it effect everyone? Clarification is needed as If it does effect the mind would it effect droids in the same way? I'm leaning to yes, but the player in question loves is "RAW" position rather than a more thematic "RAI" approach.

Affects their mind, which is indicated by "allows the user to manipulate the senses of others" and how much of the power works based on specifically picking out people to hide from in addition to what is being hidden, as opposed to it just being a blanket illusion. So it wouldn't work on Droids.

Yes it is a mind trick that allow a player to make someone else believe you are not there or you look different. You need the magnitude upgrade and the duration upgrade to make it really work. Plus an enemy not seeing the character can still know he is here.

Droids are unafected by the Force so no, you cannot misdirect them.