I'm not a network admin, but I have had to setup these in an advanced network class.
My understanding of the usefulness is you can setup a network within a network that has different "rules".
EG. My Uni had a 4 primary vLANs (a few others, but less important). Faculty, Printers, Workstations, Dorm
It didn't matter where in the campus you plugged in, if the port you plugged into was set to the "Dorm" vLAN, you could not connect to any computers on the Workstation vLAN, you had a throttled i-net connection, and you could only connect to the printer share port on the Print vLAN.
If you were on a Faculty vLAN, you had full access(TCP/IP level) to any other computer in the Faculty vLAN and had unblocked iNet connection.
The Printer vLAN had all of it's IPs statically assigned via DHCP and was one large broadcast domain. Because the printers were on their own vLAN, it didn't matter where in the campus a printer was plugged in, only devices on the printer vLAN could see the broadcasts. Also, the printer vLAN would only accept connections from within the Campus.
One way you can think of the vLAN is it mimics what would happen if you had multiple switches connected to a central router. Now, imagine this router has different rules for how the different switch(LANS) could talk to eachother. Now, take this abstract idea and apply it as a "virtual" feature that can be configured per-port instead of per physical LAN
What you guys descriptbed sounds more like VPN than vLAN.
vLAN does just the opposite. It makes a single LAN look like Multiple LANs separated by routers. So, Instead of having to use a router to segment your network, you can use vLANs to segment the network.
The typical way you segment a network is you have multiple LANs.
eg. Say you have one LAN for your server, one LAN for your Clients, one LAN for your printers.
Normally you would have all your servers on one switch, all your printers on another switch and all your client on yet another switch. These 3 switches would be linked together via a router and the router would apply certain rules.
But what if you have clients/servers/printers scattered all over and it's impossible to physically locate/connect each network devices to its proper switch?
You use a vLAN to emulate these segmented LANs virtually instead of being stuck physically locating/connecting devices to their proper groups.