The first screenie was too big, and those can be a little annoying to view. In terms of selection and transformation, gradients are usually an indicator of the area of influence and falloff so it does indeed lead me to believe it is some kinda of soft mod/ soft selection mode. Check your actual move tool settings to see if you checked anything on. If I remember the videos right, I think its new feature in Maya 2009, I think those tiny S's are a result of you using the pre-2009 soft modification tool.