Originally Posted by longcut
What is it called when you don't actually notice people to recognize them? Like, when you're out in a public place and you don't even see someone until they say hi to you, and you look at them, and then you recognize them?

Are you thinking of Prosopagnosia? That's usually really severe and due to brain damage. Other than that, it's just focusing on relevant data in the surroundings AKA spacing out or going on auto-pilot.