Invisibility and the Unseen realm in Middle-earth for 5e
In the world of Middle-earth invisibility works differently than in most 5e settings. Invisibility occurs when the subject has moved partially into the Unseen realm (also called the 'wraith-world'), but invisible beings still cast shadows in direct light.
Most physical creatures exist in the Seen realm, but wraiths and other beings may exist primarily in the Unseen realm. They cannot see into the Seen realm, but rely on other senses; wraiths, for example, can smell the blood of the living.
Elves exist in both the Seen and Unseen realms, although in the Unseen realm they appear as shapes of bright light. However, they do not see into the Unseen realm (normally).
An invisible creature:
The Unseen Realm is equivalent to the Ethereal Plane for the purposes of spells and other gameplay rules.
Truesight and See Invisibility allow a creature to see into the Unseen realm from the Seen realm, and vice-versa.