The example the first poster gave is a terrible example of misdirection, in fact it's not even misdirection.
Misdirection IS incredibly important as many of you are saying, but it's not what many of you are saying. Good misdirection leaves the spectator with the impression that they were watching you the whole time. You let them look at a place that they think is important, while you accomplish the secret move somewhere else, and they believe they were watching closely the whole time. Well they were watching closely, they just happened to be watching the wrong space.
Let me illustrate the difference with an example. Say I want to ditch the deck.
Bad 'Misdirection' - You are holding the deck in mechanics grip and you say 'look, a meteor shower' the moment they look around your hand goes in the pocket and ditches the deck. Mission accomplished? Well nobody saw you do it, but unless there is a meteor shower going on it won't take long for your audience to realise they've been tricked, and when they think back on the trick there is an obvious moment where they think 'he could have put the cards in his pocket then because I wasn't looking'
Good Misdirection - You place an indifferent card face down on the table, actually switching it for a selection, you tell your audience to watch as you wave your hands over the card on the table then take a step back and ask the audience members to turn over the card. They're all watching closely because they know something is about to happen. While everyone's attention is focused on the card, your hand goes into the pocket and leaves the deck there. Mission accomplished? Yes! This time not only did you ditch the deck without anyone seeing you do it, but also nobody feels like they were made to look somewhere they didn't want to look because they all chose to look at the card, also, as far as they are concerned, they watched everything you did and still saw nothing.
That is effective misdirection. Don't make anyone look anywhere, just offer them a choice you know they will take, and while they look at that, do your sneaky stuff somewhere else.
If they ever think 'damn he made me look away, i probably missed something' then that's not misdirection, they might not have seen you do it, but they haven't been misdirected.
Tom