Not only can you watch traffic, but you can modify it as well. This is where it gets really cool, and very useful for testing functionality on your site. To illustrate this, let's say you were using Google Analytics, Measure Map and WebTrends to analyze the data from your site (purely hypothetical, I assure you ;-), and you wanted to browse your site without sending hits to those tools. Oh, and you really didn't want iTunes tracking your usage either. Here's what you'd do.
1) Install Fiddler
2) Select Rules -> Customize Rules...
3) In the editor, find the section "OnBeforeRequest"
4) In that section of the code, you'd add the following:
// Don't send Measure Map requests for site XYZ (XYZ is a number)
if (oSession.url.indexOf("/XYZ")>-1 &&
oSession.oRequest.FailSession(403, "Measure Map tracking", "Measure Map tracking");
// Don't send GA requests for site NNNNN-N
oSession.oRequest.FailSession(403, "GA Tracking", "GA Tracking");
// Don't send WebTrends requests for DCSID
oSession.oRequest.FailSession(403, "WebTrends", "WebTrends");
// Don't send tracking information to Apple (actually 2o7.net) when using iTunes
oSession.oRequest.FailSession(403, "Apple tracking", "Apple tracking");
Drop me a comment or email if you have any questions on this. It's a very powerful tool that provides a lot of additional functionality as well. Thanks EricL!