Monk's explanation is good. It's a lazy way to get your character to perform moves they can't in normal game conditions, or to keep the player involved during non-playable moments. In practice it means you can never relax at any time in the game, including cutscenes and other traditional downtime, and you're going to be repeating sections over and over until you hit the right buttons in the tiny time frame. If they appear in cutscenes then you'll watch every one by focusing on a tiny portion of the screen in case a prompt appears; you won't watch what's happening on the screen at large. If they appear in combat, on the other hand, then you'd better resign yourself to doing 3 times the bosses health bar in damage before he finally drops because you failed one split second demand and the game gave the creature half it's health back.
I'm not a fan of the concept and never will be. It's nothing but lazy programming and lazy design. I can't think of a simple example out of the many I've sat through where I felt it to be worthy of inclusion. Conversely, I can think of scores of times when they have made a game painful.
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