You follow people you are interested in, and get a feed of what all of those people are doing.
 
The twitter box says 'what are you doing right now?' - but that question doesn't really relate to what twitter is used for. People use it to share news, share opinions, thoughts, links, information, even photos.
 
The way I see it, Facebook is relationship based - you follow people you know. Twitter is interest based - you follow people who share your interests or who you find interesting.
 
Now, the 'killer app' of twitter is being able to follow subjects - not just people. Using any one of the many twitter clients out there, you set up a feed for a subject. People typically tag their updates which makes it easier for people to follow that subject. #reddit is a tag, for example. So you can add that to your client, and see everything being said about reddit in realtime. Set up a few important tags for your interests and you suddenly have a very powerful way to receive information.
 
I was like you not so long ago, Twitter seemed pathetic and full of self-important people. But a couple of friends explained the above, I tried it out, and suddenly came to realise the power of it.
 
The biggest Twitter tip is you simply cannot utilize it to the full via the website. You need one of the other clients to really 'get it'.
 
Hope that helps