Electricity has other uses, too. After all, there's the power grid and batteries. As for electroshocks being of benefit, low-current electric shocks (say, under 5mA) aren't that dangerous and can even be used in muscle therapy. It's sometimes used in conjunction with acupuncture therapy for pain relief.
As for its classification, it's considered "less-lethal" because under normal use it is highly likely to not result in death (now exceptions can occur, such as those with unique sensitivities or those who thrash themselves into lethal injuries, but such should be exceedingly rare). The intention for less-lethal weapons is to have a middle ground of coercion between words and lethal force, particularly if a subject is too agitated or aggressive to approach in person (think a big drunken bloke at 3AM). If they don't respond to words and it's unsafe to approach (say, you risk getting a haymaker for your troubles), then you'd appreciate something that just subdues the bloke temporarily so you can get the cuffs on him. Now, like anything, it can be abused and overdone, but I for one would prefer police trend towards less-lethal sidearms. I look at it from the receiving end--which would you rather have, a bullet in your gut or a pepper spray in your face?