Well no you're not really using bitcoin, not even Coinbase bitcoin. At the end of the day the creditcard simply uses a normal credit card transaction, which is denominated in dollars and paid for by Coinbase, in dollars, to the merchant.
All Coinbase does is
1) make sure you enough bitcoin to cover the transaction
2) sell your bitcoin to recoup the dollars they're paying on your behalf to the merchant
None of this has anything to do with the blockchain or bitcoin as a technology. It's purely a practical product to make it a bit easier to make payments when you have a lot of money stored in bitcoin. I doubt it'll be anything significant, various other players like Xapo did this in a similarly reasonably professional manner and none of that blew up, either.
The reason it's not all that interesting is
1) again, it has nothing to do with bitcoin/blockchain
2) you need to store your bitcoin at a centralised company, essentially creating the equivalent of a traditional bank or financial service with the same issues and with no real extra benefits
3) it solves none of the myriad of security and fraud issues that have plagued creditcards we've had for decades (creditcards are basically plastic sheets of text, the text being the password to your money vault, and you have to hand it over all the time to make payments. It's an insane security premise)
4) it's actually pretty expensive, not only are creditcards expensive (both due to fraud and because you're putting profit into the pockets of a middleman), but on top you're essentially doing a forex currency conversion (in this case bitcoin -> usd) everytime you make a payment.
They're advertising 'no fees' at the moment, of course that's not structural. In fact I'm a bit surprised that legal gave the OK to charge customers $10 for a product without communicating usage fees for said product on any specific timeline whatsoever, normally that's guaranteed trouble & customer complaints down the line. That's like your ISP charges you $100 to install your internet connection, then says 'no monthly internet fees for a limited time'. You can bet your ass it'll turn into a gigantic mess a few months later when you suddenly start charging usage fees.
Still, I welcome it. Making bitcoin more pragmatic for mainstream users is something I applaud. I just don't have high expectations for this particular product.