This article contains plot details from the latest book.
Empathy is the special ability that allows an elf to sense emotion. An Empath senses emotion through physical contact. However, if a person's emotions are particularly strong or if an Empath is particularly powerful, physical contact is not required. Most Empaths can feel at least some of Sophie's emotions without physical contact, as Sophie has stronger emotions due to her tweaked genes and human upbringing, which Keefe sometimes complains about. In Lodestar, Councillor Oralie is able to sense both Sophie's and Mr. Forkle's anxiety without physical contact when they are returning from visiting Gethen. She also senses Gethen's desperation for information about the Peace Summit through a force field. Although force fields are a barrier for many special abilities, this isn't the case with Empathy.
In Lodestar, it is mentioned that humans' emotions are much easier to feel/detect and that an Empath can feel human emotions without touch; similar to how a Telepath can detect human thoughts without blocking.
On page 667-668 of Nightfall, Keefe tells Sophie that for stronger Empaths, there is a risk that the mind's natural reaction for when extreme levels of emotion are experienced is to shut down. Because every emotion is intense for an Empath, if they are not careful they can end up going "numb". When an Empath goes numb, they have a hard time distinguishing between the feeling they get from an emotion and what that emotion actually is. For a regular Empath, a person's rush of anger feels equatable to extreme excitement or euphoria -- both release adrenaline and usually result in elevated heart rate or bursts of shivers. The difference is only noticeable when the Empath realizes why they are feeling these emotions. A numb Empath would not be able to distinguish between these feelings. Their own emotions would stay the same whether they hugged someone or punched them in the face. Keefe speculates that this is what happened to Vespera.
When an Empath lies, their heart skips three beats -- one for guilt, one for fear, and one like a held breath, waiting to see if somebody will catch them. This physical reaction happens to all Empaths and is instinctive and unavoidable. This is how Sophie was able to tell Councillor Oralie was lying during the Countdown Scene in Legacy.
While most Empaths are capable of sensing a person's lies due to the amount of subsequent guilt the person feels, their senses can be deceived. If an Empath feels strong emotions towards someone, such as powerful love or disdain, then they may not be able to pick up on the lies they tell. This is how Lady Gisela was able to lie for years to Lord Cassius and Keefe Sencen, despite them both being strong Empaths.