The arcane warrior now only partly exists in the physical realm while Combat Magic is active. Spanning the gap between the real world and the Fade grants a bonus to mana regeneration and a chance to avoid attacks.
The Fade Shroud ability alters Combat Magic visually as well. While active the caster becomes ghostly, white and transparent like all spirits seen in game unless Rock Armor is applied afterwards, in which case the caster appears as a non-white transparent version of themselves.
For the PC version, should the player be unhappy with the change of appearance by Fade Shroud, a simple mod to remove the ghostly transparency can be found here.