As useful as DCC is, you should be very cautious about receiving files. Just like the real world, there are virus lurking out there, and there are jerks on IRC just waiting to send system corrupting files to unsuspecting users. At the very least, run a virus scan on a file before you execute it. It will save you lots of headaches in the long run. It measures the amount of lag time for the message.
Excessive lag can make communication difficult.
Can be useful if you want to know if things like DCC, ping, or finger are active on their system. I guess it might be useful if you wanted to know what time it was in Australia, if your were talking to an Aussie. Since the connection does not go through the IRC network, it is the most secure type of direct communication with another user. Depending on your client, you will probably get some kind of message asking you to accept the DCC chat request. The file name and the full path of the file on your system must be specified.