PC Tech has just recently provided an excellent answer to this question.
It said...
The form factor of a motherboard determines the specifications for its general shape and size. It also specifies what type of case and power supply will be supported, the placement of mounting holes, and the physical layout and organization of the board. Form factor is especially important if you build your own computer systems and need to ensure that you purchase the correct case and components.
Peccavi
September 2010