What attackers do. Attackers encrypt, encode, pack or otherwise disguise files, scripts and commands so that security tools and analysts cannot easily read them. This serves the Defence Evasion tactic and appears in almost every stage of an intrusion.
How to defend. Use security tools that analyse behaviour at run time rather than only static signatures, and enable script logging that records content after it is decoded, such as PowerShell script block logging and AMSI integration. Sandbox suspicious files and archives. Application control limits the impact even when a payload is not recognised.
Signs to look for. Look for long Base64 strings in command lines, high entropy files, password-protected archives in email, scripts built from many concatenated fragments, and packed executables with few readable strings. A common gap is inspecting only the outer layer of nested archives or encoded scripts.