FUSE stands for Filesystem in USErspace. You can find the homepage here. FUSE has been blessed and rolled into the official kernel tree as of 2.6.13 and above (I think). For the past (some period of time) there have been two prevailing competing implementations of filesystems in userspace: FUSE and LUFS, but FUSE seems to have won out in the community. The good things about the way these things happen is that if you were a fan of LUFS, you can just compile your own custom kernel without FUSE support and build the LUFS kernel module and you have what you want with very little effort.

The FUSE kernel module and the FUSE library communicate via a special file descriptor which is obtained by opening /dev/fuse. This file can be opened multiple times, and the obtained file descriptor is passed to the mount syscall, to match up the descriptor with the mounted filesystem.