This folder behaves in such a way that it's almost as if a number of Folder Actions are attached to it. For one, if iTunes is running, you can simply drop media in this folder and it will be added to your iTunes library. If iTunes is not running, the new media will be added the next time you launch iTunes. On top of that, the media files added to your iTunes library will be moved, not copied, so you don't end up with duplicates.
Finally, if you add a folder of content to the Automatically Add to iTunes folder, another folder will be created if there are files not added to iTunes. I have a friend who sent demo songs from his band, and in the folder he provided were pictures from their latest performance. The JPGs were placed in a separate folder titled Not Added to iTunes.
[robg adds: If you'd like to make it easier to use this folder, just make an alias elsewhere, add it to your Dock, Toolbar, Sidebar, etc.]

