I have seen plywood used in a number of bathrooms in place of
plasterboard when the wall is going to be tiled.

Is this a good idea?

Yes.

What are the pros and cons?

When WBP ply gets wet, it cares very little. When plasterboard gets wet, it
turns to the same consistency as semi-digested baby food.

Cons? It's more expensive. 20 quid a sheet, instead of a fiver.

What's just as important is tiling technique. You should forget any idea of
dot-n-dabbing tiles for a shower. Ensure you use a full bed of an adhesive
recommended for commercial swimming pools. Check occassionally to ensure
100% contact. Use a similarly high quality grout and seal it with Lithofin
KF StainStop. Do that, and your tiles will remain in place for a hundred
years.

Christian.