I call this the "tablecloth variation"
because it looks like my memory of
my Mom's kitchen tablecloth when I was three years old.
In this variant, you don't ever need to press your mouse down - it's all done with gliding mouse movement.
The idea here is that you start and end characters on the light colored squares. In between, you can visit red squares. The most frequently typed characters (eg: e, a, t, ...) just go from one light colored square to another without ever requiring a visit to a red square. The more obscure characters are longer, with more detours to red squares along the way.
The applet to the right always shows you what the options are while you're typing, by showing what direction you need to go next in order to complete various characters.