Deniable encryption serves to undermine an attacker's confidence either that data is encrypted, or that the person in possession of it can decrypt it and provide the associated plaintext.
An advantage of steganography is plausible deniability, that is, unless one can prove the data is there (which is usually not easy), it is deniable that the file contains any.
One example of deniable encryption is a cryptographic filesystem that employs a concept of abstract layers, where each layer would be decrypted with a different encryption key.
This form of deniable encryption is sometimes referred to as steganography.
Deniable encryption allows its users to decrypt the ciphertext to produce a different (innocuous but plausible) plaintext and insist that it is what they encrypted.
Deniable encryption augments standard encryption by making it impossible for an attacker to mathematically prove the existence of a plaintext message.
Frequently, at least one individual is known to the host country, so there can be a deniable channel of communications.
Put differently, "clandestine" means hidden, while "covert" means deniable.
