Facebook Places has three key components: Help you share where you are, help you find where your friends are, and discover new places around you.
At the live announcement, Chris Cox (VP Product, Facebook) talked about how technology is encouraging interaction in the real world and forming a living history. Think of Places as a form of digital storytelling.
Imagine getting a push notification: "this is where your parents had their first kiss, here are the photos, this is what their friends said about it" - or something like that. "One day, when it's done, you'll go to a page and on that page will be our collective memory and that's dope."
Facebook also announced that they were partnering with the other leading geolocation services--Foursquare, Gowalla and MyTown (with others to soon follow)--and allowing them to integrate their services into Facebook Places.
For the most part these geolocation services have only been popular among the early adopter and geek crowd. Now that Facebook has jumped into this space, it will be interesting to see how quickly the 500 million members of Facebook embrace (or don't) this new service.
Avoiding a privacy debacle will be key to making this a successful mainstream service. Right now it looks like Facebook has learned from its previous privacy misteps--the default setting for Places will allow only your friends to "tag" you to a location or see where you've checked in.