This is a very nice utility, especially for those used to the deep 3D interface of OS 9. In spite of all the shadows and other 3D effects, the OS X interface is actually much more "flat", and the active window looks very similar to inactive ones, especially in the graphite mode.
So, this app helps very well to distinguish the active window from the background, so no more guesswork is needed (sometimes an app is active, but its main window is not). I don't use a desktop pic, so I have no problem with desktop getting dimmed. Actually, I even like it since my 21" CRT does not glow at me that hard, but I see the information I work in full brightness.
The manual mentions that changing a refresh rate does not change the CPU load very much. This is not true with my G4. At the default refresh rate of 0 (whatever that means), I had constant 40% CPU load by FocusLayer alone, and it did slow the system down at certain critical moments. I changed the setting to 0.4 sec, and the CPU load went down to less than 1%, while behaviour remained almost the same.
The icon in the Dock remains even if the setting is off, and this really needs to be fixed.