Night-time is the time of your main activity, when you sneak into guarded buildings in city location to steal valuables or make trips outside of the city to rob castles and mansions situated in separate locations. In the night your character wears thief's characteristic "work" clothes and equipment. You look like thief, thus guards of the City Watch will attack you without hesitation if they spot you.
In the day-time you walk the streets of Kartmar dressed as a regular citizen. Guards of the City Watch don't recognise you for the night-time thief and thus consider you to be merely one of many citizens and won't bother you unless you do something criminal in front of their eyes. You use your day-time to sell loot, pay rent, eat and prepare for your night adventures — collect information about places of interest by scouting, talking to locals and listening to their conversations.
Day and night cycles form natural basis of time progression in Thievery. Every day and night are part of a date. Some plot events will not happen before or after a certain date and each task, customers give you, you have to complete before specific date. Some places in Kartmar are accessible only on specific dates, while others are more or less guarded or have more or less loot depending on date.