This is a great new feature in jdev11g where as in 10, I had to restart oc4j everytime I modify a java source file. This also works if I make changes to the adfc-config.xml and ADF BCs. However, I have not found a way to have fast swap work for backing beans.
After I turned on this option, I noticed exceptions in the console:
java.net.URISyntaxException: Illegal character in opaque part at index 16
A quick google turned up the following threads
It would seem that there are some issues with blank spaces in the user home dir for jdev11g. Hence, setup a new environment variable