I just finished this program and one thing that was bothering me was a few nitpick things that made it work, I'm not sure how, maybe I'm just not looking at the problem correctly.
Code:
#include <windows.h>

#define DIVISIONS 5

LRESULT CALLBACK WndProc(HWND, UINT, WPARAM, LPARAM);
LRESULT CALLBACK ChildWndProc(HWND, UINT, WPARAM, LPARAM);

int idFocus = 0;
TCHAR szChildClass[] = TEXT("Checker4_Child");

int WINAPI WinMain(HINSTANCE hInstance, HINSTANCE hPrevInstance, PSTR szCmdLine, int iCmdShow)
{
  static TCHAR szAppName[] = TEXT("Checker4");
  HWND hwnd;
  MSG msg;
  WNDCLASS wndclass;

  wndclass.style = CS_HREDRAW | CS_VREDRAW;
  wndclass.lpfnWndProc = WndProc;
  wndclass.cbClsExtra = 0;
  wndclass.cbWndExtra = 0;
  wndclass.hInstance = hInstance;
  wndclass.hIcon = LoadIcon(NULL, IDI_APPLICATION);
  wndclass.hCursor = LoadCursor(NULL, IDC_ARROW);
  wndclass.hbrBackground = (HBRUSH)GetStockObject(WHITE_BRUSH);
  wndclass.lpszMenuName = NULL;
  wndclass.lpszClassName = szAppName;

  if(!RegisterClass(&wndclass))
  {
    MessageBox(NULL, TEXT("This program requires a Windows OS that supports Unicode."),
      szAppName, MB_ICONERROR);

    return 0;
  }

  wndclass.lpfnWndProc = ChildWndProc;
  wndclass.cbWndExtra = sizeof(long);
  wndclass.hIcon = NULL;
  wndclass.lpszClassName = szChildClass;

  if(!RegisterClass(&wndclass))
  {
    MessageBox(NULL, TEXT("An error has occured while attempting to register a child window."),
      szAppName, MB_ICONERROR);

    return 0;
  }

  hwnd = CreateWindow(szAppName, TEXT("Checker4 Mouse Hit-Test Demo"), WS_OVERLAPPEDWINDOW,
    CW_USEDEFAULT, CW_USEDEFAULT, CW_USEDEFAULT, CW_USEDEFAULT, NULL, NULL, hInstance, NULL);

  ShowWindow(hwnd, iCmdShow);
  UpdateWindow(hwnd);

  while(GetMessage(&msg, NULL, 0, 0))
  {
    TranslateMessage(&msg);
    DispatchMessage(&msg);
  }

  return msg.wParam;
}

// handles all of the little child windows together, however, does not control the user input
//  to each child window
LRESULT CALLBACK WndProc(HWND hwnd, UINT message, WPARAM wParam, LPARAM lParam)
{
  // window handles for 25 child windows
  static HWND hwndChild[DIVISIONS][DIVISIONS];
  // none of the below values are static because they need to be used once whenever the 
  //  WM_SIZE message is processed, they are not used whenever any other message is processed
  // will hold the length of the client area
  int cxBlock;
  // will hold the height of the client area
  int cyBlock;
  // the below 2 values are mostly for loop iterations and keeping track of the focus box
  // will hold the length of the child window
  int x;
  // will hold the height of the child window
  int  y;

  switch(message)
  {
  case WM_CREATE:
    for(x = 0; x < DIVISIONS; x++)
    {
      for(y = 0; y < DIVISIONS; y++)
      {
        // create 25 child windows
        hwndChild[x][y] = CreateWindow(szChildClass, NULL, WS_CHILDWINDOW | WS_VISIBLE,
          0, 0, 0, 0, hwnd, (HMENU)(y << 8 | x),
          // get the instance from the parent window using this method with these
          //  values passed into it
          (HINSTANCE)GetWindowLong(hwnd, GWL_HINSTANCE), 
          NULL);
      }
    }

    return 0;

  case WM_SIZE:
    // get the size of the entire client area in the parent window and divide it by 5,
    //  this will tell the average height and length of the child windows
    cxBlock = LOWORD(lParam) / DIVISIONS;
    cyBlock = HIWORD(lParam) / DIVISIONS;

    for(x = 0; x < DIVISIONS; x++)
    {
      for(y = 0; y < DIVISIONS; y++)
      {
        // realign the child windows so that they would all fit within the client area
        //  of the parent window
        MoveWindow(hwndChild[x][y], x * cxBlock, y * cyBlock, cxBlock, cyBlock, TRUE);
      }
    }

    return 0;

  // if the left-mouse-button is pressed somewhere in the main window, a error message beep
  //  will be given
  case WM_LBUTTONDOWN:
    MessageBeep(0);

    return 0;

  // On set-focus message, set focus to child window
  case WM_SETFOCUS:
    // get the focus from one child window to another
    SetFocus(GetDlgItem(hwnd, idFocus));

    return 0;

  // On key-down message, possible change the focus window
  case WM_KEYDOWN:
    x = idFocus & 0xFF;
    y = idFocus >> 8;

    switch(wParam)
    {
    // move the focus square up
    case VK_UP:
      y--;

      break;

    // move the focus square down
    case VK_DOWN:
      y++;

      break;

    // move the focus square left
    case VK_LEFT:
      x--;

      break;

    // move the focus square right
    case VK_RIGHT:
      x++;

      break;

    // move the focus square all the way to the top and to the left
    case VK_HOME:
      x = 0;
      y = 0;

      break;

    // move the focus square all the way to the bottom and to the right
    case VK_END:
      x = DIVISIONS - 1;
      y = DIVISIONS - 1;

      break;

    default:
			
      break;
    }

    // calculate the position where the 
    x = (x + DIVISIONS) % DIVISIONS;
    y = (y + DIVISIONS) % DIVISIONS;

    // move everything over by eight bits and add to itthe variable x
    idFocus = y << 8 | x;

    // set the focus to another child window from a previous one
    SetFocus(GetDlgItem(hwnd, idFocus));

    return 0;

  case WM_DESTROY:
    PostQuitMessage(0);

    return 0;
  }

  return DefWindowProc(hwnd, message, wParam, lParam);
}

LRESULT CALLBACK ChildWndProc(HWND hwnd, UINT message, WPARAM wParam, LPARAM lParam)
{
  HDC	 hdc;
  PAINTSTRUCT ps;
  RECT rect;

  switch(message)
  {
  // passes into the reserved memory a 0, indicating that an X is not to be drawn in a
  //  particular window
  case WM_CREATE:
    SetWindowLong(hwnd, 0, 0); // on/off flag

    return 0;

  case WM_KEYDOWN:
    // send most key presses to the parent window
    if(wParam != VK_RETURN && wParam != VK_SPACE)
    {
      // first value passed into the function is the window handle to the parent window
      SendMessage(GetParent(hwnd), message, wParam, lParam);

      return 0;
    }

    // for return and space fall through to toggle the square

  case WM_RBUTTONDOWN:
  case WM_LBUTTONDOWN:
    // resets the the special value that is being stored
    //  in this case the value is xored with a 1 and if the original value was 0(no X is
    //    there from the outstart), the new value would be a 1
    //    however, if the previous value was a 1 then a xor with another 1 would yield a 0
    //    and the whole X would be erased across the child window
    SetWindowLong(hwnd, 0, 1 ^ GetWindowLong(hwnd, 0));
    // sets the focus to this particular child window
    SetFocus(hwnd);
    // the entire window will be redrawn
    InvalidateRect(hwnd, NULL, FALSE);

    return 0;

    // for focus messages, invalidate the window for repaint
  case WM_SETFOCUS:
    // get the id of the particular child window
    idFocus = GetWindowLong(hwnd, GWL_ID);

  // fall through
  case WM_KILLFOCUS:
    InvalidateRect(hwnd, NULL, TRUE);

    return 0;

  case WM_PAINT:
    hdc = BeginPaint(hwnd, &ps);

    GetClientRect(hwnd, &rect);
    Rectangle(hdc, 0, 0, rect.right, rect.bottom);

    // draw the X

    if(GetWindowLong(hwnd, 0))
    {
      MoveToEx(hdc, 0, 0, NULL);
      LineTo(hdc, rect.right, rect.bottom);

      MoveToEx(hdc, 0, rect.bottom, NULL);
      LineTo(hdc, rect.right, 0);
    }

    // draw the focus rectangle
    if(hwnd == GetFocus())
    {
      rect.left += rect.right / 10;
      rect.right -= rect.left;
      rect.top += rect.bottom / 10;
      rect.bottom -= rect.top;

      // inbetween the dashes there will be nothing drawn
      SelectObject(hdc, GetStockObject(NULL_BRUSH));
      // a dashed line will outline a rectangle
      SelectObject(hdc, CreatePen(PS_DASH, 0, 0));

      Rectangle(hdc, rect.left, rect.top, rect.right, rect.bottom);
      DeleteObject(SelectObject(hdc, GetStockObject(BLACK_PEN)));
    }

    EndPaint(hwnd, &ps);

    return 0;
  }

  return DefWindowProc(hwnd, message, wParam, lParam);
}
My question is about the 2 different portions that I made bold.

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The first one. Since idFocus is initially 0. In the first line of the first bold portion, the entire thing is anded with a 0xFF. Why would one do that? I guess what I'm asking for is a nuts and bolts explanation.
Then in the first part on the second line, 8 bits are moved over to the right. Again why would you do that(in the context to the entire program)?
-------------------------------------------------------------------------------
On the second boldened part, 8 bits in y are moved to the left and then it uses or with x and re-assigns it to idFocus. Why?
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Thanks in advance for your comments, I'll keep at this problem for some time.