In a fair market value (FMV) lease, the lessor expects to get the equipment back or sell it to you at whatever it is worth at the end. Because the lessor keeps that residual value, your monthly payments are lower than on a loan or a $1 buyout lease for the same equipment.
It suits equipment that ages quickly or that you plan to replace, such as computers, imaging equipment or point-of-sale systems. It fits poorly with equipment you intend to use for many years, since buying it out at the end can cost more in total than financing the purchase from the start.
Before you sign, ask how fair market value will be determined, what notice you must give to return the equipment and what happens if you miss that deadline. Some leases renew automatically.