Armor does show up on your body. Different armor types have a different 'look' on you, and there are different colors as well. As for hoods, they do show since the latest update but I noticed that not everything with an icon that looks like a hood will show up on your character.
"Hand weapons" refers to 1-hand weapons that are not "Light" weapons. Damage for these is improved mostly by Strength but also Agility. If you are a Rogue, I suggest focusing on Agility and Light weapons.
Yes, flanking is attacking from the rear. This becomes much easier once you have a companion. The easiest companion to recruit early on is Grissenda, in Northern Bluemist River, one map West of Lannegar. She's also probably the best companion for Rogue imo. As for stealth, it helps to approach from behind enemies, they seem less likely to detect you that way. Obviously higher level enemies are harder to sneak behind, and also some enemies have 'detector' attribute and will able to detect even when stealthed. Most bosses are this way.
Hope this helps, and welcome to this amazing game, enjoy it!