From BlenderWiki

Individual Center as Pivot

In Object mode

In (Rotation around the individual centers), the object centers of each object remains at the same location while each object is rotating around them.

Positioning the center of the objects is a most useful technique that affords you more control over your animations. Let’s examine (Rotation around the individual centers):

• The center of the hourglass is coincident with the median of all its components.
• The positioning of the center of the star at the tip of one of its branch allows for a rotation around it with only the use of Rot Ipos that are more faithfully interpolated than what you get using the 3D cursor in the same position.
• The center of the crescent is completely outside of what to us appears to be the object. You must understand that the center really marks where the object is; what we see on the screen is a description of what the object is made of: vertices, colors, stuff, and it can very well happen to be off-center, like for the crescent here.

In Edit mode

With the vertex or the edge selection methods in use, a selection of vertices or of edges has its pivot point at the median of the set of vertices so selected. For more information see the Median Point pivot section.

As soon as the face selection method is in use though, the pivot point as the center of those faces becomes possible.

It is possible to rotate individually each face only in face selection mode. Only faces that don’t touch each other can be transformed in this way without deforming. You can only use the Proportional Editing Tool (PET) while translating individual faces this way.

Faces that touch, even when they are inside an Fgon, are deformed when rotated with individual centers as the pivot point.

Fgons and groups of faces can be scaled and their outside perimeter won’t be deformed. The individual faces inside them aren’t uniformly scaled though, something you should take into account.

All those deformations won’t happen if you are not using the face selection mode; it becomes impossible to edit more than one face or one group of faces at a time though.

Once you are aware of its limitations and pitfalls, this peculiar tool can save a lot of time and lead to unique shapes. This “anemone” was modeled from a 12 sided cylinder in about 10 minutes by using repeatedly this workflow: extrusions of individual faces, scaling with median as a pivot point, and scaling and rotations of those faces with individual centers as pivot points.