It's a portal to
The Nether (MC's version of hell). Not active in SMP yet, but when it is it'll be super handy. Traveling 1 block in The Nether = traveling 8 blocks in the "Real World," so I could travel from the Spawn portal to the portal in my house through The Nether 8x faster than I could normally.
Plus there's blocks in The Nether (Glowstone, Netherrack, Soul Sand) that aren't available through natural means in the Real World.