Yes, it is used primarily for object generation. However, that generation can only be run on the map's compilation, not in-game. (sadly)
It can save some people time on making objects (like if you want to mass-create an object with different values), or if you want to make a system more portable. (you can have anyone copy and paste the script into their map, and it will generate the objects for them)
The only problem is it is a bit limited. You can set object fields but you cannot read them. For greater flexibility, there are things such as GMSI (found on wc3c.net). The good thing about Lua, however, is that one only needs to download Jass NewGen to use it. (IMO, Jass NewGen should include GMSI)