It's kind of a social network with some gaming extras (custom chat channels with voice, groups, server ip where people play, video broadcast, tracking your friends gaming, file exchange, know-who-is-talking, etc.). I suppose the most important feature is to be able to keep track of your gaming friends and chat with them whenever you want.
BTW, not all games support all of the features.
People still uses hyperlobby and others apps, x-fire just sits on top of them as an all-time loaded application (3-5MBytes)