You gotta be near a person, and then go into sneak mode. Go stand next to, or just behind a guard, close enough that he's aware of your presence but not really facing in your direction. Then go into sneak mode and just wait, you'll go up a few levels in no time. I always practice a little in one of those guard towers in Balmora. At the upper level stands a guard, and right behind the guard is a closet, on top of the closet lies a decent magical sword called "sword of white woe" or something. When you enter the floor he'll keep an eye on you, but you can get behind him with a little jumping and other acrobatic stuff, and post yourself between the guard and the closet. Focus on the sword while in sneak mode all the time, you'll notice whenever the guard watches you or not by the on and off switching of the sneak icon in the bottom left corner. You don't necessarily have to steal the sword if you don't want to, but it's a good way to go up a few levels fast.
Either that, or lay down a brick on your CTRL key and go to sleep. You'll be level 100 when you wake up the next morning.
