The essential problem with it is that it's become such a jargon term that many people use it completely unreflectively, without even considering what they really mean by it - much less what it really ought to mean.
The most common, and dangerous, misconception that has become attached to it is that there is somehow an automatic advantage in choosing less-owned players.
THERE IS NOT. There is only an advantage in identifying less-owned (and/or cheaper) players who are going to score more points than the more highly-owned (and/or more expensive) alternative picks.
The much-absued term 'differential' is, however, highly relevant, meaningful, and useful in a number of other applications - which rarely or never seem to merit explicit consideration in FPL circles. 'Differential' value is actually crucial to all selection decisions; but it operates in a number of different ways.
Where the 'differential' concept actually MATTERS:
1) Price differential: Is the player you're targeting a better points-prospect than all other players available at the same or similar price-point?
2) Position differential: Is the player you're targeting a better points-prospect than anyone else you can afford in the same position category?
3) Club differential: Is the player you're targeting likely to give you a bigger points lift over the next best alternative than another player at the same club would give you over their next best alternative? [This is the chief - and almost invariably unappreciated - argument against selecting David Raya; a fantastic goalkeeper, but not that much better than any of his rivals in FPL terms - while a number of his Arsenal teammates are (at least, sometimes) much better than most of their rivals.]
4) Price-step differential: Is the player you're targeting likely to give you a bigger points lift over the best alternative one price-step cheaper (usually you're focused on a positional comparison, but occasionally it might also be in the context of a club quota) than the points lift that an alternate pick might give you over their closest cheaper competitor? At the start of the season, all price-steps are 500k, but later on, an interval of even 100k or 200k can sometimes make a big difference. [Most of the time, you'll just be looking at the possible impact of a one price-step difference between two options. But sometimes - particularly at the start of the season, when choosing the initial squad - you might be weighing up the advantage of spending 1 or 1.5 million more on a particular slot.]
5) Transfer differential: Is the player you're bringing in likely to give you a bigger points lift over the guy you're replacing than other transfers in your squad might produce?
6) Team differential: Does your overall team selection (and squad selection - because you will often need to draw on your bench) offer you a substantially better points-potential than the likely global average score this gameweek, and (perhaps even more importantly) than the selections of the key rivals in your mini-leagues? [I prefer to maintain my team differential advantage by trusting that my opponents will make some bad picks, rather than by avoiding taking their good picks for myself.]
Ownership level has no bearing on any of that! The ONLY THING you should be interested in is whether a player (more properly, in fact, a group of players, in the context of each other) is offering you the best points return for the money you have available.
'Ownership' will only become relevant for breaking a dead-heat: if you really can't decide between two possible picks, they seem to you to have absolutely equal prospects by all criteria - then you can go for the less-owned one. (But that NEVER happens.)
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