To the end user, a good switched-mode power supply is likely to be more desirable than a linear supply. Lower cost, higher efficiency, lower weight and smaller size and, potentially, electrical performance as good as a linear supply.
Switched-mode supplies are complex circuits with complex behaviour - desiging such a circuit from scratch is difficult. Modern sophisticated controller chips now do most of the hard work, and circuit design is therefore much simpler. Before the development and wide availability of these chips these suppliers were very much a niche item.
In a typical PC, there are two slightly different applications where switched supplies can replace conventional supplies:
(1) The first is the simple step-down regulator (for example for converting 5V into 1.6V to power a CPU). Older motherboards used to use linear regulators for the CPU - these regulators simply dropped the voltage available to the CPU. This meant that if a CPU needed 6 A at 3.3V and the PSU supplied 5V, the regulator would draw 6 A from the PSU and would drop 1.7V, therefore dissipating 10W as heat (Power = current * voltage). A switching regulator conserves power - in the example above the regulator would draw approx 4 A from the PSU and dissipate considerably less heat. - The disadvantage in this case is the higher component count - the linear regulator needs one component (the regulator chip), the switched supply needs the controller chip, capacitors, 1 or more inductors, and 1 or more switches (sometimes these are internal to the controller chip).
When switching regulators first started to feature on motherboards, there was a bit of a fuss - and Intel recommended that only linear regulators be used with the Pentium line of CPUs. Switching regulators have come a long way since then. These old regulators used to operate on 20-50 kHz - these slow supplies needed big capacitors to maintain an acceptable ripple voltage. In the event of a sudden high demand of power, the power supply could not increase its output until its next cycle, during this time the CPU could have performed 10,000 cycles at full load. A linear regulator could respond 100x as quickly.
Modern switched supplies operate at much higher frequencies (as high as 2 MHz) and use multi-phase techinques. The advantage of a 2-phase supply is that while one phase is in its 'off' state, the other is in its 'on' state meaning that there is always current flowing into the resevoir capacitors and therefore virtually no ripple. The benefits of 3 or 4 phase circuits over 2 phase are marginal - the only real advantage is that the response time to a change in load is slightly quicker.
(2) The second is the conversion of mains power into a low-voltage isolated supply. Traditionally, such a supply consisted of mains power feeding an iron transformer, which fed a rectifier and high-value storage capacitors. This is then followed by regulator as described in (1) above. Several problems arise with high power requirements - energy loss in the transformer, the necessity of very high value storage capacitors, energy loss in the regulators and the sheer bulk of the transformer. (A 300 VA iron transformer is bigger than an entire ATX power supply unit).
The operation of a switched supply in this circumstance is slightly different - the mains AC is first rectified to DC (switchable 110/230 V supplies will usually route 110V through a voltage doubling rectifier circuit). The resulting 330 V is then stored in large resevoir capacitors. A switching circuit then switches this voltage at high frequency (20-50 kHz) to form a pseudo-AC voltage. This HF AC voltage is then fed to a transformer - because of the high frequency ferrite transformers can be used - these are much smaller than iron (a 400 VA ferrite transformer as found in a typical ATX supply is a little bit smaller than a shot glass). The low voltage is then rectified back to DC, and smoothed with some small capacitors. The voltage is measured by a reference circuit which lights an LED when the voltage is correct. This LED shines onto a light sensor which is used to control the switching circuit. The LED/sensor arrangement is necessary so that there is no electrical connection between the mains and the low-voltage electronics.