What does the iTunes "Media Kind" actually do?

It's very useful to be able to change the media kind if you own an iPod, as you get different features for audiobooks and podcasts (2x speed, 1/2 speed, skip back 30s).

I would also consider the searching, filtering and library categorisation as a feature. I think it is nicer to see the Hitchhiker's Guide as one book icon, with the chapters organised within that, rather than having this lumped in with the rest of my music.

Another benefit of having your media properly categorised is when it comes to using shuffle during playback. Before I moved my audiobook rips out to the audiobook section, if I decided to just hit shuffle for some random songs from my library, I'd often get random audiobook chapters in amongst the music. Though I don't have any, I can imagine that the same would also be true of any iTunes U content, etc.