Stealth is a possibility in this game. Here's the breakdown:
Thermal signature is given off by colony populations and by engine thrust - default is 1 thermal per 1 thrust, but defensive systems let you reduce that. A large engine throttled down to nearly nothing will consume extremely little fuel and produce extremely little thermal, allowing you to 'creep up' somewhat easily.
EM is given off by colony populations, active shields, and active sensors. The strength of the shield and the strength of the active sensor will generate a larger signature. This cannot be mitigated by any tech - if you want better shields/actives, then you're going to have a larger signature.
Actives detect mass of vessels, and the effective sensor mass can be mitigated using cloaking technology. This functions similar to modern day radar-absorbing material. You have a full sized jet, but only appears as a small owl on radar.
Additionally there is electronic warfare, ECM on a defending ship will reduce the attacking ship's active sensor power by a percentage when used against that particular ship. If you have an ECM of 2, and they have an ECCM of 1, then you should have a 2/1 advantage and reduce their lock on range by half. This doesn't help you avoid detection usually, but it does help you avoid fire.
That's how you can defend. Thermal masking, lower speed, shields and sensors turned off. But what do sensors help you see?
Thermal sensors will let you see colonies very easily, and will let you see any vessels that are moving around the system - particularly you'll get a good glimpse of all the ships in the system that are moving.
EM will let you see any ships with shields on (most are off by default, since shields burn fuel) and any ship with Actives on will shine like an EM beacon. If you're being hunted or if there's active military patrols, your EM sensors will show what ships are currently looking to point their guns at you.
Actives are required to get a weapon lock and fire. They really won't detect anything that you haven't already seen, but they're required to start firing. Thermal signature might be detected across the whole system while active lock is only in the 10mil km range. You shouldn't turn on Actives until you're prepared to fire.
My ending suggestions? Thermal sensors are very important. EM is good supplementary. Actives mainly need increased power when you're anticipating incoming missiles - large ships are easy to spot, it's mainly good to be able to see missiles at long range and get your lasers firing on them as soon as possible.