The subtle Caffeine menu bar item is built for one thing in specific: keeping your Mac from going to sleep. It comes in handy if you want to be able to use your Mac whenever, without waiting for it to come out of sleep or hibernation or of putting up a screensaver.
I wouldn't overuse Caffeine though, because sleep and screensavers are there for a reason, that is conserving your computer's energy, and also making better use of the battery. If you keep your Mac always on and active, you are using more energy without giving your Mac a rest.
If you need to keep your Mac awake though, it's very easy with Caffeine. You activate it by clicking on the menu bar item. If you keep the Command key pressed at the same time you'll bring the program menu.
Caffeine keeps your Mac awake. Just don't overuse it otherwise it might get edgy.
- Fixed a bug where Caffeine was effective when another user account was active