Nobles are a type of villager in Fable II and Fable III. They represent the upper-class aristocracy of Albion. Whatever degree of caste difference might exist, however, the noble "elite" exists as co-equal citizenry of Albion, carrying civilian status as certainly as the average villager.
Identified as '(Name) the Nobleman' or '(Name) the Noblewoman', they will always wear expensive clothing and lavish homes located in the richest districts, such as Castle Fairfax or the Millfields. They usually also sport posh mannerisms befitting their status, although as is the case with all villagers, this is subject to variation.
An ill-defined upper peasantry, ranging into the upper middle class and the lower nobility informally, exists - Eliot or Elise being such an example. The Hero is himself or herself by definition noble and aristocratic as Prince or Princess.
In Fable II, nobles are only seen in Bowerstone, specifically around Castle Fairfax. They usually can be seen talking among themselves, telling stories to each other, or listening to lute players. In Fable III, nobles are more common, usually found walking the roads around Bower Lake in Millfields , strolling through the gardens or front courtyard of Bowerstone Castle, and may occasionally be seen perusing wares in Bowerstone Market (Fable III). In the Traitor's Keep DLC, once Professor Faraday has been apprehended and the Hero has helped Huxley in Reconstruction, a large number of nobles will take up residence in the 'Street of the Future' on Clockwork Island.
Being the upper-class citizenry, nobles act according to their status. The nobles of Fable II do not ascribe much worth to the Hero of Bowerstone until they earn more renown. The Hero in Fable III, on the other hand, is initially welcomed by the nobles in the first part of the game, as their status as prince/princess puts them in the higher echelons of society. Although the nobles ignore the Hero once they leave the castle to ready the revolution, they behave like any other villager when the Hero becomes monarch, averting their gaze or bowing appropriately when necessary. Nobles also are among the most difficult prospects for marriage, as they are easily repulsed by certain gifts that they see as 'lower class,' like beer. They also expect a nicer home and upkeep than other villagers.
Certain Legendary Weapon augmentations requiring the "killing" of unspecified generic "nobles" constitutes murder as definitely as the slaughtering of rustics. "Nobles" can in every sense be understood as simply intra-differentiated type of villager: there are in fact, no enemy combatant nobles encountered within Fable III (the self-made elite shock-troop royal guard of Logan not of nobiliary background) and consequences are grave for the career of those willing to affirm weapon enhancements necessitating murder of civilians, whose only crime was being contingently noble.
Although the masquerade-masked people in the Dark Sanctum wear the clothes of nobles and speak like nobles, they are in fact not nobles, at least not as far as the game's classification of nobles is concerned - they will not count as noble kills for powering-up weapons such as Arkwright's Flintlock.