What it's for
Like any currency, different things to different folks.
It's the seed of a currency that is not under the control of a government or any other human agency. in that respect it's a hard currency like Gold. But physical gold is expensive to safeguard and validate and impossible to use for e-transactions, and "paper" or e-Gold is vulnerable to fraudsters (who basically sell the real gold out of whatever vault it's supposed to be in, leaving a hollow shell of un-backed paper gold.
As for who is using Bitcoins: all sorts of people, but I fear Bitcoins are of greatest utility to those with most to hide. Apparently there are shops out ther in cyberspace on the Tor network, that supply illegal substances. You buy using Bitcoins, untraceably, and a packet may later arrive in the post which may contain your choice of illegal drug. Buyer beware, but E-bay has proved that the straightforward sort of fraud is not profitable. You can't maintain a reputation while ripping off many of your customers. Especially not for low-value transactions that promise repeat purchases. It's better to cultivate the repeat business. What works for legal products appears to work for illegal ones. (All allegedly ... I have no idea beyond what I've read about it).
It seems to me that the more governments gain access to our transaction histories and employ "big data" computing, the more attractive the Bitcoin will become. I don't mind Tesco having a record of everything I've ever bought at Tesco (except the cash no card transactions!), but a world where the government's computers analyze every single purchase and financial transaction that I've ever made is not apealing. Enter many more Bitcoin users?
Which is one reason governments hate Bitcoins and would like to kill them off if they could. Their propaganda (with more than a grain of truth) is that Bitcoins aid money launderers and tax evaders. Their other reason is that if Bitcoins flourish, it will be at the expense of all governments' ability to print their own money, and thereby rob (or tax) us all by inflation.
We live in interesting times. (Smiley face just worked out that the circle on the inside of the empty envelope is the bit he's supposed to eat).