VLC is possibly the ultimate piece of software for anyone who wants to listen to/watch anything on their computer. It is open source, meaning that anyone is capable of contributing to its development, and it is 100% free. Available on all major operating systems, there really is no excuse not to give it a go!

One of the most obvious features of VLC is it's playback functionality, so far it has been capable of playing back virtually everything that I've thrown at it, even partially completed downloads which most other software throws up errors on.
In addition to support with almost endless amounts of codec support, it has no end of options you can mess with whilst playing back video, ranging from "screenshots" of video to the ability to de-interlace on the fly.

One of the best playback features is the ability to customize what features of a video track are used - such as multi-channel audio/subtitles, and where it is outputted (if you have multiple monitors/sound outputs).
In addition to playback VLC is built upon a solid framework of video conversion/streaming - allowing for you to setup your own Internet TV channel (if you have the knowledge)!

The user interface probably isn't the simplest to use (especially with advanced features) although for basic playback it is easy enough.

I'd say VLC is a must for anyone who frequently watches video on their computer, and occasionally wants that extra option which doesn't appear in most other applications.