Both. If the focus is way out you get a screenful of meaningless blobs, but the difference between 'almost right' and 'right' makes a significant difference in sharpness of temperature contrasts, showing up small hot & cold features. In turn, this causes the displayed temperature range to scale to accomodate them, reducing the visible noise.
I took some images of the woodburning stove last night (the evenings are still cold enough, I reckon) which look great, really sharp, with a maximum indicated temperature of around 260 °C. Unfortunately, I discovered all the spare memory cards I have knocking about here are mini-SD, not SD, so I can't post a picture.