Immersive Citizens focuses on improving the AI of Skyrim's inhabitants. The goal is to make them act like normal humans would in this environment and it does a very good job.
The mod overhauls two areas in particular: The time when an NPC is in his or her standard state and the time when he or she is in a combat state. There are a ton of tweaks to both.
This is one of our favorite Skyrim mods for the PC and it's an outstanding release for console. It's highly recommended.