The fretless bass guitar, referred to by players as just the "fretless", creates a sound much closer to that of a plucked classical bass, or bass fiddle, and is used most often within modern and fusion jazz, as well as being a common feature of some pop/rock ballads because of it's softer, more natural sound.
It can come with "fret marks" so that you can see more clearly where the notes are, but this is looked down upon by some bass snobs who prefer the look of a pure black fingerboard, because it makes them look more professional in their minds. These markings are often referred to by them as "learner lines".
It is much more difficult to play than the fretted variety since if it is played inaccurately it can sound out of tune and awful, but this can be used to one's advantage if one wants to experiment with "quarter tones" and deliberate inaccuracies.
They tend to be a fair bit more expensive than ordinary fretted basses because they're made in much more limited quantities by bass guitar manufacturers, as the demand for them is nothing like as heavy since they're so much harder to learn to play, even for experienced players.
They sound especially cool when played with certain effects, such as chorus, flanger and delay. You'll rarely hear them played through distortion effects but this can be a very powerful sound with which one can achieve things a lead guitarist can only dream of with the greater sonic range of the instrument.
Notable, though sometimes occasional, fretless players include: