Growl is commonly used by applications within Mac OS X to notify you of tasks being completed - i.e. when you're uploading a large file to a server and you switch away to do something else and don't want to have to constantly check to see if it's done, Growl will pop up a little window to let you know the file is done.
It's not one of those apps that's critical to day to day use of a Mac, but you sure miss it once it's gone. And it looks like for support in Lion, it'll be a must purchase for most previous users.
At $1.99 it's no longer the free system notification system it used to be. But hopefully with real money behind it's development it will only get better.