A focus-forming assay is a lab technique used to find out if a particular piece of DNA contains oncogenes (genes which are associated with cancer).
This is done by putting the DNA into animal cells which normally show contact inhibition (they stop growing when they come into physical contact with other cells or reach a certain density in the culture). If the cells lose contact inhibition and form areas of densely-packed cells (called foci) after receiving the DNA, it means that the DNA did contain oncogenes.
The information in this writeup was taken from the science dictionary at http://biotech.icmb.utexas.edu/; I oversaw the development of the dictionary (the website was mothballed in 1998) and I believe I wrote the entry this is based on.