Pretty much what JJ said. As far as the user is concerned, a system with a cd or dvd burner and software like InCD will treat a rewritable cd/dvd as a hard drive or big floppy disk.
Advantages? It's just a convenient way for me to backup (or in my case, selectively backup) my files. I guess it's because I don't do an entire system backup that I found InCD to be fairly quick and painless.