It's made for a script use, where you have 3 parameters: 1. parameter is the filename 2. (optional) the encoding for subtitles 3. (optional) the scaling of the video, since fullscreen doesn't mean that the video will be scaled.
When recording screencast some people like to have the image from their webcam, so the can show something, that can't be seen on the desktop. So starting mplayer with these parameters you will have a window with no frames, borders whatsoever, and selecting the window a hitting the "F" key you will bring it in fullscreen. if you want to position the frame somewhere else, you could play with the --geomeptry option where 100%:100% mean bottom right corner. The HEIGHT and WIDTH can't be changed as you like, since the most webcams support specified dimensions, so you would have to play with it to see what is supported
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