Why am I using toothpicks as frets rather than metal frets or fret wire? Several reasons: toothpicks are easy to work with, readily available, are relatively straight and are easy to glue securely. Not to mention, they won't hurt too much if you leave a sharp edge.
I know that toothpicks aren't the ideal size for frets (they are too large) and have a tendency to "bend" the tone if you press the string all the way to the fretboard. I also have found that toothpicks absorb some of the sound.
I've been experimenting with wire frets. I couldn't use "real" fret wire because they mostly come with tangs (you can find fret wire without tangs, but that's just wire to me). Because the fretboard is plywood and thin, I was worried that the tangs wouldn't hold and would delaminate the plywood.
I have been using regular wire (I think its 16ga) that is normally used for gardening. I had to build a wire straighter (it was impossible to do this by hand/eye). And I am using normal titebond 2. Just make sure it dries really well before filing the edges. I also use a triangle file to make the slots more rounded (rather than square saw cuts).
So far, its been working fairly well, I'm still not sure which I prefer toothpicks or wire.
Frets are used to change the pitch of a string when playing.