It's not just a website
It's a resource that holds data about practically everyone which can be used by marketers to market to them effectively. They don't even need to do it via traditional banner ads but it can include incentives i.e. anything from getting free credits in a game if you "suggest" it to 10 friends etc. or many other forms of marketing which is much more cost effective too.
Infact using this model the user doesn't even have to be on the Facebook website but simply using an application/game that has uses the Facebook APIs.
This is where mobile games is heading (which I work in) and some of the valuations (Plus+/Ngmoco : 400m) for small social networks where also ridiculous but if that's what they where bought for then Facebook with it's potential it many magnitudes bigger and covers everything.
There's a real land grab going on at the moment but the problem is Facebook has already grabbed it all, and as Sean Parker said. To get someone to change their social network doesn't just require them but most of their friends and their friends etc. Once the masses started using it the game was over.
Personally I think a lot of these valuations going around are a joke but don't be surprised if Facebook isn't one of them.