Well, I had no idea what Spaces was so I decided to give it a try. It's actually really neat. Instead of having a desktop that looks like this:

I can assign "Spaces" where I want programs to be. For instance, I set it up such that in Space 1 I have all of my programs that are Internet Based. Safari, iChat, Mail and SlingPlayer.

In Space 2 I have programs that I use frequently. iCal, Notes and iPhoto.

In Space 3 I have all the applications that I use primarily for fun. iTunes, Photo Booth, Garage Band and Handbrake.

And finally, in Space 4 I have the programs that I often don't use regularly but I still need. System Preferences and Cyberduck.
To switch between all I have to do is hit Command and the Arrow Keys and I can go to whichever Space I want. It clears up desktop clutter if you're wanting to focus on a single thing but still want to keep the other applications accessible.
It takes a bit to get used to but switching between the Spaces is easy and it seems really convenient so far.