What it does
This technique is a specialty of Kirigakure ninja. Users fill the air with mist and control its thickness with their chakra. Once the mists are thick enough that opponents cannot see, that in turn means they cannot manage much defence against the user. Zabuza Momochi famously used this technique to perform assassinations; The mists can be created using water from the surroundings, Sensors also can still find targets despite the lost visibility.
Hand seals
Seal of Confrontation
Description
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In Naruto: Shippūden episode 15, Itachi Uchiha claims that the mist does not prevent him from using his Sharingan, contradicting both the manga and earlier anime scenes.
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In one of the cutscenes for Naruto Mobile, the mist Zabuza forms spreads out from his body in a vortex that can deflect shuriken and kunai.