DisconnectedOperation with a NetworkFileSystem refers to its ability to synchronize changes to files during during intermittent loss of connectivity. This would allow a laptop with a WLAN connection to wander in and out of range without any ill effects. Several different desktop and laptop computers could keep the same files across without the user being bothered by less transparent solutions like Unison File Synchronizer. Changes are replicated to and fro between the server and client whenever the connection is reestablished.

DisconnectedOperation has an annoying side effect: to allow for servers to fall over when editing a file, the entire file has to be shipped to your client before you edit it. Although this is inconsequential when you are working on SourceCode or other small files, you will feel the burn when you are looking at large binary files, logs, or the like.

The only FileSystems to support DisconnectedOperation currently seem to be Intermezzo and Coda.

BrianJohnson? notes that finding what the current status of these projects (now found on their respective pages) was a bit challenging and hopes this will help someone else.