I got this really good explanation from someone else on the boards.
Outside of each cabin, there is a metal fish that the crew use to leave messages, etc for people in their cabins. The FE is a (generally) cloth device with several pockets, that "extends" the fish by hanging off of it, and adding pocket space for folks in an organized "FE Exchange" to leave you small gifts.
As for some examples, I can tell you that last year as a cabin gift we gave out a little baggie with small chocolates and tic tacs. They were each wrapped in personalized wrappers with our cruise date. For the kids, I gave a baggie with disney pencils, candy, disney stickers, glow bracelets, etc. I also gave a couple of gifts related to events happening onboard like a wedding and some birthdays.
We got from other passengers: a tote bag, lip balm, a photo album, personalized candy bar, an envelope with cool pics from around disney, some pens, small bottles of alcohol, shot glasses etc. The kids got: notebooks, stickers, bracelets, candy, toys, etc.
There are several threads on here with ideas for "homemade" gifts as well as gifts "for the not so crafty". It's lots of fun and the things don't have to be over the top. Plus, we don't have many families participating so it shouldn't be too difficult. On my last cruise we had to have gifts for over 20 cabins which was alot. On this one, so far we have 4 families participating.
We'd love to have you join in.