Precision typing on smartphone keyboards generally isn't the most pleasant thing in the world, but Windows 10 Mobile has taken some extra steps to make the experience more relatable to typing on a hardware keyboard. This is achieved through the cursor controller, which houses virtual arrow keys found on all the Windows 10 Mobile keyboard variations.
Actuating these keys is done by holding onto the dot found found toward the left side of the keyboard. Hold that little dot, and four directional arrows will pop up that behave much like the arrow keys found inside an actual keyboard. Still holding your touch, drag your finger onto the direction you want to move the text caret. You will be rewarded with a satisfying tactile clicking sound and a step closer toward your destiny. Continue holding that direction, and the speed of each step slowly increases.
Now as I mentioned two sentences ago, the arrows found in the cursor controller behave like actual arrow keys, and thus there are some behavioral implications to this. For example, if you're typing a web address in the browser and the suggestions pop up, navigating up and down with the virtual arrow scrolls through that suggestion list much like you would when typing a web address on a conventional PC browser. You can also use the up and down arrow keys to navigate away from the text fields in the forms found in apps like the People app, but this doesn't really achieve anything because it kills the keyboard.
If for whatever reason you'd prefer having the cursor controller on the right side of the virtual keyboard, you can go into keyboard settings and change to the left-handed orientation.
In practice, I find the arrow navigation a tad too slow for real use, preferring instead just to drag the caret to my desired destination. If you have fat fingers and find your aim constantly off, using the virtual arrows in conjunction with the caret navigation can make typing on the virtual keyboard just a bit more pleasant.
This examination was done with OS build 10586.107 and firmware revision 01078.00027.15506.02004, which is currently shipping and updating with the Lumia 950. This Lumia 950 is not in the Insider program.