Fitts law is a basic UI principal that predicts how easy it is to click on something. Larger things that are close to the mouse are easier to click and smaller things that are far away are harder to click. This principal guides a lot of UI design and helps ensure the proper placement of buttons, controls scrollbars and other elements.
It's perhaps not fair to call it a 'law' since many applications and operating systems break the law in many places. One of the artifacts of this rule is that the edges of the screen end up being much easier to click. In Windows XP & Vista the start button is clickable from the far-most corner even though the pixels in that corner are visually not inside the button area. (However the clock is not clickable, oops)
Fitts law predicts how easy something is to click but it doesn't predict what you're actually more likely to click. For example given two buttons that have the same meaning you are more likely to click the larger one.
Let's take an actual example:
Here I'm showing the mouse as it hovers along the taskbar. The user is moving their mouse along the bottom looking for a particular application. Once they see that application there is a strong instinct to want to click on the actual object that they see because it's larger. This is what I call "Fitts Mental Law" the user will want to click the larger button. From the users perspective the image is the application so this maps to what they want.
Unfortunately on Vista this doesn't work. As soon as you move your mouse toward the large image it disapears. Add another little frustration to my growing list.