Openstack is basically a bunch of tools to setup a large-scale virtualization environment... where you can quickly create & manage virtual machines through a GUI, and keep track of what is going on. It'sanother framework similar to Amazon's EC2 and S3 services. There are others similar to this, like Eucalyptus and CloudStack.
Some of the many ways to apply such a thing can include:
- Scaleable websites that can dynamically scale up & down on the fly. (as needed more instances can be provisioned and used... then shutdown when not needed anymore)
- Software testing environments where you need to re-create a live environment with multiple servers, then dispose of it when done.
- Super-Computing... where you can put a bunch of servers on the same task to tackle a VERY complex problem in parallel.