It's easier to show than tell – see this screenshot:
Here's what I have already looked into:
Preferences: no settings that (seem to) apply here;
Universal Access: in particular, "Assistive Devices" – my first thought was that I had inadvertently used a keyboard shortcut that triggered this mode which is in fact an option under Assistive Devices
Deleted & Reinstalled iTunes: including the cache, temporary files in
I have also surfed the Apple Support forums, and indeed, there are several posts about this, but all of them unanswered.