Well it's not that known, but i think it's great. I got to know so many new Bands i really like. Last.fm is basically a site which tracks your listened music from your media player of choice and gives you similar bands etc which you may like. For example if you listen to Nightwish you get these Bands as recommendation:
Tarja, Epica, Within Temptation, Xandria, Sirenia, Sonata Arctica, Delain
which are similar to Nightwish and you may like
I don't know why it isn't that much known.. i really like it.
So you can basically see which kind of music the other person listens to, how much alike your music taste is etc.