My understanding comes mostly from Sam Harris.  The moderates provide a shelter for extremists.  The majority of people are moderate about their religious beliefs.  Mosts honestly believe, but really don't think about it much.  if you press them, they may admit agnosticism, but they will not take kindly to criticism of their beliefs despite the fact that they really don't think about it much or live by their beliefs much. 

This creates a buffer zone between people who ask questions and criticize and those for whom the most criticism would be intended.  That is, when someone writes a book, an artcle, a post, or a letter to an editor criticizing faith, the extremist may write back, but the general public--being moderate for the most part--will react with defensiveness making the extremist feel like they are surrounded by like-minded people.

That is, when the questions are asked, the moderates defend faith rather than saying something like 'yeah, that's a good question, why do you fundamentalists do that?'  Instead, the moderate position goes with the status quo, which is currently that of defending faith (they will paint it as defending people's right to believe what they want, but they really mean to believe without criticism or challenge).

Their is much apathy, laziness, fear, and unwillingness to think about their position in the moderate religious community.  But because they have all been surrounded by religion all their lives, and have not been challenged (or challenged themselves), they automatically create a buffer zone around fundamentalists.  Thus, when people like us, here at the RRS, speak up, it seem like we are attacking without provocation, because the moderates are mostly not provoking. 

We're interrupting their comfortable lives.  They may be functionally secular people, but they still believe.  When we ask them why, they don't even know, so react defensively.  This defensive barrier provides cover for the fundamentalists. And when we confront the fundamentalists directly, the moderates may look on and see this as the fundamentalists stepping up and defending their moderate ideas, not fully realizing that the fundamentalists share little in common with them, and are not defending moderate religiousness at all, but threatening it.  They don't realize that it is the atheist who generally is trying to defend their ability to live a quiet, uninterrupted life of moderate, unquestioned belief.

Shaun 

I honestly don't know if this will help or not since the prior two answers provide exceptional explanations, but from what I have seen many are indoctrinated at an early age. They may on occasion attend church service but for the most part religion is absent from their daily lives. They rationalize beliefs until they create a unique god of their own and have simply stopped thinking about it.

They will make and laugh at jokes about religion in public, but when challenged they become quite offended. They are fully aware of the ridiculousness of their beliefs, but because that was how they were raised, because they have family members that still believe or live in an area saturated with believers they continue to accept basic beliefs. They don't question it and they don't want to. They will scoff at you if you bring it up and then get angry. Explaining the lack of facts and their weak arguments is almost cruel. Compare it to telling a three year old there is no Santa. They will defend their beliefs and present every illogical argument you have seen on this site. Logic does not matter. After becomming monumentally frustrated they will walk away claiming "it is a matter of faith" while condemming you for challenging them.

I have often thought that if we could somehow start opening churches and start the services off in a way familiar to them and then over several weeks un-doctrinate these people until all they are left with is reason - slowly walk them away from their false beliefs - we would have a whole lot of educated, reasonable, caring people. Plus we could get better bands!

Seriously, these people are, in my opinion, more dangerous than fundamentalists. I was one of them.

Here is a repost of an essay I wrote several months ago dealing with the topic of moderate theists.  I hope it's helpful.

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Today, I will attempt to piss off Moderate Christians. This is going to be a difficult task, because one of the primary reasons I'm calling them out is their obstinate refusal to be offended. I had a long conversation tonight with one of my friends, who is some variety of theist, although he's very difficult to categorize. He was relating to me a dilemma he's going to face this weekend when his Moderate Christian family is going to ask him to go to church. The question of whether he should go, even though he disagrees strongly with many of the Christian church's teachings, is very close to me.
Earlier today, I was reading a blog on an atheist forum, and spent a good hour of my life trying to convince a fellow atheist that he should not wear a yarmulka to an orthodox wedding just because it will upset his girlfriend if he doesn't. I had to go to court earlier this month, and when the judge asked me if I swore to God that I would tell the truth, I had to bite my tongue before saying yes. This is something that comes up a lot in our religiostupified (Thanks for the new word, Byron!) country.
The fact that atheists butt heads with religion too much for my comfort is not the topic of this essay, though. I think it illustrates my gripe with moderates perfectly. Without spending thirty minutes finding statistics that will be debatable, I'm going to hazard a guess that maybe 20% of Christians in America are either fundamentalists or evangelicals or both. It doesn't really matter. The point is, they're the minority of Christians. Most are moderates – they believe in some version of Christianity, most likely one that leaves out the nastier elements like stoning homosexuals and the unscientific elements like a 6000 year old cosmos.
These moderates, in my view, are the ones directly responsible for the decline of America into quasi-theocracy that has occurred in the last 30 years. Their complicity is a result of at least two things: first, they defend fundamentalists as “slightly misguided, but genuine, honest people,” and second, they defend “faith” as a legitimate source of knowledge. I want to deal with the latter of the two failings.
Moderate Christianity is deceptively alluring because of its seemingly scientific basis. Most educated Christians have no problem admitting that there's something to evolutionary science, and they have no problem admitting that the earth is very old, and that dinosaurs once roamed about. In fact, if you get a good Moderate Christian into a theological discussion, they will almost inevitably tell you that they believe questions are good, and that any thinking person ought to question what they believe. Forgive me, but the devil is in the details, and they're missing a very, very important detail.
The admission that questions ought to be asked makes it seductively simple to believe that moderate Christianity is ok, and doesn't hurt anyone. Maybe it's even helpful in some way. The problem, and the main point of this essay, is that questioning is NOT ok for moderate Christians. I can prove it.
Next time you're talking to a moderate, try getting them onto the nature of god. If you're any good at debate, you can quickly steer them to one of the half dozen paradoxes inherent in god belief. Once you get them there, note how quickly they will revert to the position, “There are some things you just have to take on faith.” The simple, indisputable fact is that any god belief requires faith, and if you follow my writings at all, you know that “faith,” properly defined, is “belief in a thing despite evidence to the contrary, or a total lack of evidence.”
Once you get them to the point of admitting that they hold a belief despite it's opposition to reason, you can see that the facade of moderation is just that – a facade. At their core, they are exactly the same as fundamentalists. They just pick a more socially acceptable irrationality. What they really mean when they say you should question everything is that you should question everything – except for the validity of faith as a means of acquiring knowledge.
If we, as skeptics and atheists, allow this hedge-bet to go unchallenged, we are also complicit in the religiostupification of America. When we look at it objectively, we can see that in the case of both fundamentalists and moderates, the individual's own sense of morality determines how much “faith” they need, or in other words, how much irrationality they will accept. Another way of saying this is that allowing a little irrationality is no different from allowing a lot.
The primary reason that moderates refuse to come out publicly against fundamentalists is the vulnerability of their own position. The really smart moderates know this, and I suspect that the rest sense it even if they can't put their finger on it. The only way to effectively call out the fundamentalists is to challenge them on rational grounds. So, you see, the lie in Moderate Christianity is that it is moderate at all. It is not. It is, however, to use the colloquial term, chicken shit. Moderates are too intellectually dishonest, or too scared, to apply logic to all questions, lest they have to give up the illusion of a sky daddy that makes them feel better about the world. They are also too scared to take a stand against those of their own faith who are using faith as a weapon, and causing untold suffering among gays, women, atheists, and, dare I say it... Iraqis. They cannot, in good ecclesiastical conscience, take a firm stand against those within their order who eschew science, for if they did, they would be opening the door to the scientific scrutiny of their own beliefs.
Moderate Christianity is a lie. While moderates do not have a political agenda advocating taking America two hundred years backwards, they allow those who do to go about their work unimpeded, and worse, they very often vote based on their religious ideology rather than their rational beliefs. I suggest that it is time to stop giving moderates a free pass just because they embrace a softer, gentler version of a hateful, misogynistic, authoritarian religion. People of reason will never have a rational leg to stand on until we challenge the very foundation of religion – all religion – that is, the errant belief that “faith is a virtue.”

Doubters Anonymous? Freethinkers Anonymous? A Twelve-Step Program Toward Rational Thinking? I like it!!

Thank you!