Often enough your development team may get into situations where they are sure that the code works just fine on their local machines but they are not so sure what would happen if they check-in and let Hudson build it.
Simply downloading & deploying hudson.war to the developer's machine to perform builds may not seem like a very useful solution. The build may now run through the Hudson hosted on the local dev box, but the build configuration would still have to point to an actual repository. This would make the whole endeavor pointless!
This is where the File System SCM comes in. If this plugin is also installed on the Hudson instance deployed to the dev box, then the developer can point to the locally checked out code and modified files as a standalone repository of sorts. It is an easy way to test that Hudson builds go through successfully. If this works then checking into the actual repository after a successful run is not a risk anymore.