If you open up the Mouse preferences panel, you’ll see a checkbox called Focus Follows Mouse. If you check this, you’ll no longer have to click inside a window to make it the focus of the operating system’s attention. Windows will „gain focus“ simply by having the mouse roll over them. This does not, however, mean that those windows will come to the front. Therefore, you can actually type into windows that are partially obscured behind other windows.
In R4.5, the Mouse preferences panel has grown a couple of new options under the „Focus follows mouse“ picklist. Enable either of the Warping options and you probably won’t notice a difference right off the bat. But open a bunch of applications and use the Twitcher to toggle among them, and you’ll see what Warping is all about quickly enough.
When you switch to a new application from the keyboard, the mouse cursor will move itself into position over the newly selected app or window. With normal warping selected, the cursor will „glide“ into position. With Instant Warping selected, the cursor will snap into position. Another great way to see the effect of warping is to minimize a window and then restore it from the Deskbar. The mouse cursor will glide from the Deskbar to the restored window.
FFM is the source of great debate: people love it or hate it. For the most part, people who like it have spent many years in the Unix world. My thinking is that if you have to bother to reach out and grab the mouse to activate another window anyway, you may as well click in it. Not everyone agrees. Peter Norby (norby@inktomi.com), for example, offers this counter-perspective:

In my case, a lot of times I’m just nudging the mouse from window to window and am not actually grabbing the mouse per-se, so I don’t want to have to do the extra clicking.
What it’s really useful for is when you want to focus without raising the window. If there were a way with click-to-focus to focus on a window without raising it, then there might be an argument.
Also, speaking generally, it isn’t clear whether the click to focus gets passed along to the app or not, depending on OS/implementation. In the case where it does, sometimes the only area showing of an App isn’t something you want to click on, such as the close button.
But anyways, it probably does just boil down to religious choice 🙂

Roman Filippov (rxf@alkor.ru) adds:
The Terminal shortcut Alt+G to switch between Terminals works only within the current workspace. If warping is on and you have several Terminal windows open on a different workspaces, then pressing Alt-G will instantly bring the mouse pointer to the current Terminal’s title tab. This way, you can hide/minimize/move Terminal windows without extra mouse movements 🙂