If you are using Canon EF series lenses you should get the AF confirmation light in manual focus. If you don't then there is likely something wrong with your technique, the lens or the camera. If the confirmation light doesn't seem to agree with what you see through the viewfinder then consider the following:
In most autofocus cameras, light has to get to 3 different places: the film plane, the viewfinder, and the AF module. (Usually, the exposure is determined from light bled from the viewfinder image.) It is possible that they are not perfectly aligned, resulting in differences in the length of the light path, and ultimately, disagreement as to what is "in focus".
The disagreement between the AF module and the focusing screen may be more readily apparent in cameras with optional split image focusing screens (600 series or EOS-1), or when using long lenses with large apertures (i.e. shallow depth of field). If your camera is under warranty, it's probably worth calling Canon service to see if they can check the alignment for you.
If you must test it yourself, try any of the "home brew" lens tests. Set yourself up with high-resolution (i.e. slow) film, a tripod, and a target of some kind (a page from a newspaper with varying type sizes is the cheapest). Try shots with AF, using MF, and maybe a few others around the distances selected with either of the first two methods. TAKE DETAILED NOTES! A large (24"x36") resolution test target is available from Edmund Scientific (609 573 6259) if you want to do more scientific tests and actually put numbers on the "sharpness" of the images. It is their part number A83001, "Resolving Power Chart", and costs $17.95 (+ shipping etc.).
Then, decide for yourself if you have any focusing problems and whether you want to take your camera in for adjustment. Both the AF sensor and viewfinder screen can be adjusted. For example the screen on the 10s is adjusted by shims and its poition can be changed in 50 micron steps (1/20mm). You should probably be prepared for about a $100 charge for this kind of adjustment (type B repair), but that would include a full cleaning of the camera.
EOS cameras with interchangeable focusing screens seem to have better correlation between AF and MF. This may be because Canon assumes that someone who wants interchangeable screens wants to use a focusing aid and manual focus at least some of the time. Cameras with fixed matte screens are assumed to be manually focused rarely, if at all. On the other hand maybe our sampling is too small to really establish a good correlation here.
Note that the "green dot" AF confirmation light will only work as a manual focus "in focus" indicator when manually focusing EOS EF compatible lenses, i.e. lenses with the EOS electronic interface. It will not work with fully manual lenses, such as, for example, Tamron MF lenses used with the Tamron EOS compatible Adaptall mount, or mirror lenses like the Sigma 600/8.
On most of the non-professional lenses, the focus throw is short to allow for quicker AF. To keep costs down, only a simple gearing mechanism is provided for MF, making the throw slightly longer, but still not that precise.
On some "L" lenses with USM, there is "electronic gearing" with the "electronic focusing ring".Indeed, the gearing can change depending on the focal length setting of the zoom lens. On "L" lenses with AFD, a more sophisticated gearing mechanism is included to give longer throw.
1) To get more precise movement of the focusing ring grip the ring towards its back edge so that your fingers also touch the lens barrel. This will give more friction, a slower turning speed, and therefore, more precise focusing. By varying the amount of pressure put on the lens barrel with your fingers, you can vary the amount of "braking force", and therefore the precision of focus. [This is the technique I used for precise adjustment of Apple ][ game paddles in my "youth". :-)]
2) Another technique is to use just one finger to focus. Gently tap/nudge the focusing ring in the direction you want it to travel The theory is that you shorten the amount of time you are manipulating the ring, and thus don't "overshoot" the zone of precise focus. This technique can be combined with the first. [This second technique was told to me by a salesman at a local camera shop. I've never gotten much out of it, but it is included "just in case".]
Speed is the reason. There are times when the AF sensor does not detect any obvious detail upon which to focus. This tends to occur when the lens starts out far out of focus or when there is no detail available to the AF sensor. To cover the case of the lens simply starting at a bad position, the AF system will "hunt" (scan back and forth through the entire focusing range) in the hopes of putting useful detail on the sensor.
By having ranges on the AF switch, the photographer gives the camera extra information to allow the camera to reduce the amount of hunting. This can help reduce the time the AF system takes in finding focus. This feature is particularly useful on lenses which may be used in action situations (like the 300/2.8L for sports), or lenses which are slow focusing (like the old 100-300/5.6).