This is very confusing indeed, and the help files for fast-user-switch-
applet are not up-to-date either.
You can actually get the icon to work by firing up Empathy and making
sure that the 'People nearby' account is checked. Once this is done, you
can change the status using the fast-user-switch-applet. However, the
icon seems to be redundant AFAICT, because Empathy has it's own status
icon and you actually need to open Empathy in order to send a message
anyway.
** Changed in: fast-user-switch-applet (Ubuntu)
Status: New => Confirmed
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Displays a red indicator on the panel which can't be changed
https://bugs.launchpad.net/bugs/262570
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