It is a friend tracker/place to talk to other people,etc.
"* See when your friends are online, what game they're playing, and what server they're on
* Join in on their games with one click
* See what the friends of your friends are playing"
also you can message your friends in game and also set up a voice communication between your friends if you both have a mic. I rarely use xfire but i do see sometimes if people i know are in other servers and i join in! Its worth downloading.