It applies some effects and sliders as well as transition effects and creates a photo gallery that is shown when the computer is not being used.
You can also choose audio files as soundtrack for your custom screensaver.
The main difference between the original Windows screensaver and Fancy Screen Saver is that the last one offers you many more effects and audio capability.
It supports BMP, JPG, GIF and WMF as image format and mp3 as audio format, so you won't have any problem to set your photos as screensaver.
Fancy Screen Saver is not a revolution but it's certain it adds some special features that make better the 'my pictures' screensaver by Windows.