While there is no universally-agreed definition of a Small Form Factor PC, most generally it describes a computer that is enclosed in a substantially smaller chassis than a standard PC, designed and specifically engineered as an application-specific subsystem.
For many military and industrial applications SFF is critical technology.
Size and weight are often generally critical factors, but compromises on performance are not acceptable.
By eliminating unneeded features, optimizing the desired functionality, and by using compact, low power (often non-standard) processing cards - coupled with critical thermal management expertise - SFF PC manufacturers can pack desktop-type performance in a package the size of a cigar box.
While inherently more rugged due to their smaller stature, SFF PC's can be readily enhanced to meet the many and varied military and industrial specifications for harsh environment deployment.
On the negative side SFF PCs units are usually premium priced as the technology to package and ultimately cool the units require far more engineering than their desktop-based cousins.
Generally small form factor PCs are application-specific, optimized for an individual subsystem and, hence, are not mass-produced.
Lower volume manufacturing always means higher price.
While they often have the same computing power as Commercial-Off-The-Shelf (COTS) products, small form factor PCs are not a good general-purpose server solution.
The compact casing limits the amount of expansion space for upgrades to the motherboard or additional functional cards/add-ons and input/output capability.
In conclusion, small form factor (SFF) PCs are not a panacea but they can be ideal for many applications where the necessity for smaller size and less weight can be balanced against a higher price tag.