Samsung Galaxy S II :: How Do Get Rid Of The Blue Cursor

I have the galaxy sii and have only had it a few weeks. awesome bit of kit, I am constantly learning new things about it. bumped into a friend with the same phone who showed me a few things. when I type and make a mistake I have to tap and hold the text box and this little blue tab appears that you can move around. my friend had these arrow keys that meant he could tap back to previously typed words. he said his phone had always been like that. he had to catch a train so we couldnt sit down and find out why they differed! Does anyone know how I can set my phone text up like this?