This would mean things (compile, run, debug, etc) would be done on the local machine, not on the remote one. Not to mention the network lag if a huge codebase.
What I usually just do is open up a terminal in the FUSE mounted directory and an SSH session in another tab. Run everything on the remote machine and make edits on the local machine using any editor I want.
RE: building, compiling without login etc - I have a bunch of aliases that let me do that remotely with ssh. You're still "logging in" but don't need to deal with anything major.
I've found that FUSE/sshfs (at least on Mac) doesn't survive network reconnects. Switching WiFi networks, or even having the computer go to sleep, is enough to put it in a state where it can neither be used nor unmounted cleanly.
They probably are referring to something like SSHFS that allows you to mount remote filesystems over SSH using FUSE. I have tried this and it doesn't work well.