Faceted shading provides a constant shading across each facet, or co-planar surface of the object. The result has the appearance of so-called "flat" shading, except that it provides specular highlights.
Vase on the right uses a faceted material.
Turn on Faceted to provide a faceted look to your geometry without having to explicitly change the smoothing groups in the object with the Edit Mesh modifier.
Both Standard and Raytrace materials provide a Faceted toggle.