Originally Posted by Adam Schneider
Simply put, fairway drivers are faster than mid-range discs but slower than "distance" drivers. But there's no sharp line between mid-ranges and fairway drivers, nor between fairway drivers and distance drivers; it's all a continuum.
The advantage of using fairway drivers is that, in theory, they're more "controllable" than faster drivers. They can't go as far, but typically they have a slightly straighter flight path.
Simplifying even further, a fairway driver's increased potential for accuracy vs a distance driver is a direct result of a slower cruise speed. Taking this example to it's extreme, this is why your putter is more accurate than any of your other discs.
To elaborate on what Adam said, disc speed is directly proportionate to the distance between the rim of the disc (where you put your fingers) and the edge of the wing. Fairway drivers are generally classified as discs with a wing wider than a midrange and narrower than a distance driver. They also tend to have a beveled edge, which is another thing that sets a driver apart from a midrange.
As for what they are used for, DexterHawk probably said it best.