I  have been using IPB for 2 months now and begun testing IPB4  a few days ago. One of the things I am not familiar is Featured Topic. I am aware its category is different and is given a star icon when set but what is the idea behind a "Featured Topic" ?

There is a module that displays featured topics. You can use it to promote certain topics to a special place, e.g. on the front page.

Sounds like it is similar to announcements. 

I'd say no. While you usually use announcements to adress certain issues/news/whatever to your users, you can use the feature option to honor user-created content and display it at a special place on your site.

I'd say no. While you usually use announcements to adress certain issues/news/whatever to your users, you can use the feature option to honor user-created content and display it at a special place on your site.

It gets clearer. At the moment I use "Promote to article" for such topics if it is containing some experience and profession.