It's just a matter of game concepts like hair10 said.

Outwit requires a LOF. Without Superman Ally/Ultimates/Trick Shot (where appropriate) you cannot draw a LOF to a character in stealth.

Close combat requires adjacency. So you can make a close combat attack on a stealth character in an adjacent square...you just can't use Outwit on them because you don't have a LOF.

Think of it this way...you know the character is there obviously. You just can't get a shot on them for a ranged attack or to use your Outwitting. But they are right next to you so you can take a big swing at them.

Can you really outwit outwit another character's outwit?

Yes.