LocNar can probably give you the best explanation of what is going on under the hood.

In simple terms, in Mouse Interactive Mode you basically use the mouse to aim your (gimbaled) weapons, and the ship flight follows that aim. It essentially means your two axis controller actually controls 4 axis in the game. It turns combat piloting on its ear. It is only available to the mouse (or someone using mouse emulation on a different device).

CIG has been getting heat over it for a long time, but as you might expect, there are plenty of players who like having an easier mode / advantage over others who do not use it. Chris Roberts and crew have been mostly kicking the can down the road (Calix R. being the one notable exception). I don't know how much it is due to Chris Roberts genuinely being in favor of Mouse IM, and how much is due to being afraid to P.O. the IM users... but it needs to be straightened out, and sooner would be better. It's already been way too long, and the longer it stays in, the more people there are that depend upon that crutch.