This is an infrared distance switch. It has an adjustable detection range, 3cm - 80cm. It is small, easy to use, assemble, and inexpensive. Useful for robotics, interactive media, industrial assembly line, etc. Infrared wave length is part of the Sun's natural light spectrum. While is a nice fit for indoor projects, outdoors with plenty of sun light and reflective surfaces on it's sight is not adviced. It's incredibly repurposable and can be used for a lot of different projects. The adjustable screw on it's back makes it very convenient for different purposes. Digital read on your Arduino pin and you are ready to go. Good sensor choice for quick prototyping.
Use it on a robot for wall detection and wall follower, or as some of the projects listed below as a trigger system. It's round shape with the screwable holders make it a good choice for a home made assembled robot, with a hole of it's diameter and the holders you can place it aiming at different positions on a robot. Or even place it near your PC to turn on and off your monitor.