S-Off and rooting can essentially go hand-in-hand. If you're gonna root it, then might as well S-Off as well and gain full access to your phone.
This security is something that was implemented by HTC on newer phones, and is on the Desire. It's a flag that controls whether the NAND or flash memory is unlocked. Having the security on will lock partitions such as /system and /recovery. This can, however, be disabled and allow access to these partitions.
The easiest way for the Desire is with AlphaRev. This only works for the GSM version, not the CDMA.
This process *CAN* brick your phone, and I hold no responsibility for any errors that happen.
Visit AlphaRev's for everything you need.
Once the process is finished, in your bootloader you should see it now says S-Off.
On AlphaRev's website there's other HBOOT tables that you can flash. These offer different sized partitions. Some custom ROMs require certain tables, such as CyanogenMod 7 requires the CM7 table, and Oxygen requires the Oxygen table. Stock HTC Sense ROM uses the Stock 1.8 table.
If you use a ROM with a low cache, such as Data++, or CM7, then you can't flash stuff like Radio from recovery as the cache partition is too small for it, so you need to do via fastboot.
You can also flash custom splash screens with S-Off as well.