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LaTeX is a document preparation language. You write your text (content) and specify by commands how it is going to look or where it is going to go on the page (form). Then you use the TeX typesetting engine to generate the result, in Postscript or PDF or even HTML or RTF. By using specific commands instead of a WYSIWYG system you have ultimate control over how it is going to look. Moreover, LaTeX forces you to think about the logical structure of your document: is this a section? or a paragraph?
As an extra it can handle the automatical generation of various tables (of content, of images, of axioms etc.), indexes, crossreferences and bibliographies. Changing all footnotes to endnotes or notes per chapter is no problem at all. You can use BibTeX to create a database of bibliographical elements that you can use from within you LaTeX documents, which is very useful. Many scientific journals and books in various fields of research are typeset by LaTeX. The layout you obtain is very clean, well-organised and readable. The modular setup (you invoke only the packages you need) makes it easy to use even for beginners, while giving experts (or TeXperts) a lot of features to use.

Actually the Not So Short Guide has a splendid intro which explains a lot of the history and functionality of (La)TeX.