The release of Windows 2000 introduced a new setting: "Hide underlined letters for keyboard navigation until I press the Alt key," which defaults on for most Western languages. What's the story behind this setting?
I still have the rationale from the user interface designer who introduced this feature. Here's a redacted copy:
To support our goal of greater simplicity, we plan to suppress keyboard navigation indicators by default. Don't be frightened...
The idea is to reduce visual noise in Windows, namely focus indicators and access key underlines in menus and windows. Aesthetically, these things are distracting and intimidating. Functionally, they're only useful when you're navigating by keyboard. They don't add significant value when you're just using the mouse. In fact, they're often redundant.
Why now? Every good thing must start somewhere. Windows will look cleaner and simpler.
What's so bad about the way things are? Access key underlines are largely underutilized and are often redundant with Ctrl+ shortcuts within the same menu. There's no indication that you have to type the Alt key to use these shortcuts. Plus, it's just odd to see characters underlined within text all over your display. Focus rectangles lack graphic integrity, and they're often redundant with the highlight on selected items or the default button.
Of course, the keyboard indicators will come back when there is any demonstration of keyboard navigation by the user. The indicators will appear and disappear appropriately. Finally, if you don't like the behavior at all, you can disable it from the Display control panel.
For what it's worth, this is one of the things I [the interface designer] came to Microsoft to fix.
An additional point not mentioned in the original rationale is that with the rise of the web browser as the primary use of a computer, users have increasingly been conditioned to treat underlined text as "Click me" rather than "Use me in conjunction with the Alt key to activate this item".
The thing about seeing randomly-underlined letters all over the screen is a point many technically-inclined people miss. To a typical user, all these indicators scream "Entering a propeller-head zone!" and "You are not smart enough to use this computer."
What does frustrate me about this setting, though, is not its design but its implementation. Using the arrow keys to navigate a pop-up menu doesn't appear to count as a "demonstration of keyboard navigation by the user", which is particularly frustrating since you can't use the Alt key to make that demonstration, for the Alt key dismisses the menu! To see what the keyboard accelerators are for a pop-up menu, you have to find a way to cause the menu to pop up based on a keyboard action (usually hitting Shift+F10 when focus is on the appropriate element). This is often harder than it sounds.