Advanced Settings Save Relationships!
Imagine you're talking to your special someone on Skype through your headset. You've been talking a while, and now it's time to wrap it up. As he or she is saying goodbye you stand up to stretch your legs. You forget how long (or short!) your headset wire is, and it pulls out of the headset jack. Now all of a sudden he or she can't hear you, and you can't hear him or her. Stunned by your lack of response to "Goodnight, I'll miss you.", your special someone disconnects the call, and blocks your username.
Had you clicked on the advanced options, you would have been able to prevent this problem. As you can see in my settings, at the top of both the microphone and the speaker list is my headset. It's got a check mark because it's the active device.
With the settings in the picture, if I yank my headset cord out of my laptop, Skype will automatically go to the next device in the list. In my case, it will go to the "Line in" and "Line out" devices. I don't have anything plugged into line in or line out, so the above scenario would happen to me. However, if I highlight internal mic and hit "move up" on the right, when my headset becomes disconnected, the person to whom I'm speaking will definitely notice a sudden difference in the call, but my speakers will kick in and I'll hear him or her asking what was going on. I can then tell them through my internal mic to hold on while I plug my headset back in.
Once the system recognizes the headset again, it will go back to using that, because it's at the top of the priority list.