It obscures your IP so that sites don’t know who you are by that, but really, they can just fingerprint your browser if you’re not addressing that too.
You can present your location to a site as being from any where the VPN has a server. Say you want to watch something that is only available to users in Canada, but you live in Mexico. You can use the VPN to present yourself to the site as being in Canada and watch it. Unfortunately, some sites are blocking content from being accessed by known VPN IP addresses. I think Netflix is one. Frustrating to me, lemmy.world doesn’t let anyone post or comment while using a VPN, though I understand that it’s for valid security and admin purposes, such as to reduce CASM material.
More importantly, it encrypts your data between you and the VPN. That means that no one between you two knows what the info you’re transmitting means. This includes your ISP that likely collects/sells your data or could report it to authorities. Additionally, it protects you from people that can join your wifi and steal your data that way, say at a public wifi like a coffee shop.
Personally, I use a VPN as much as possible, especially when I’m connected to any wifi outside of my home. In fact, I will absolutely not access security-sensitive sites (e.g. bank accounts, credit cards, etc.) on public wifi without using my VPN.