Yep, that's a bugbear of mine: the application (context menu) key is actually useful and some keyboards do indeed remove it in favour of Fn. The Matias Quiet Pro loses both right Windows (which I use for Win+L: lock PC) and the application key!
Fn is typically implemented in the keyboard controller, and it changes what key is reported by the keyboard to the computer. The computer does not know that Fn exists, and the key does not send any make or break codes: it's completely invisible by itself.
The application key is roughly the same as shift+F10, but IIRC the latter doesn't work in the Windows 7 start menu for search results (it works fine in Windows 8 though).
You can remap any other key to application, but Fn is a dead key that is a complete and utter waste of space for anything besides compact keyboards that actually need it. (Laptops need Fn, but they tend to put it on the left between ctrl and Win, and you may well still get the application key. Except the idiotic laptops and Cherry G84 keyboards that put Fn at bottom left …)