If you press alt ingame your client will freeze, the client will still receive packets, but it won't do anything with it, rendering the player invulnerable until they re-enter their screen or press alt again.

A video showing this:
http://www.youtube.com/watch?v=5SeZ--8tRt0

for as far as I know this bug has been in minecraft since even before Alpha, in that time almost everyone knew of it, but now people are exploiting it again.

I can vaguely remember it had something to do with LWJGL, the server used to kick players for this, but it doesn't anymore.