Ideally it would self-activate if someone was not typing or moving for a few minutes. Having an AFK sign pop up out of someone's head would prevent a lot of awkward social situations.
I agree, I go AFK for long periods of time instead of logging out. I come back to 20 PM windows stacked and trying to deal with everyone at once... So also add the AFK sign to PM windows too. It would be very helpful, unless people want to explain to everyone you were AFK!
This isn't a bad idea, it would be good to have. I just don't think it's something that needs to be done soon, so unfortunately if I implement it, it won't be for a long time probably.