Historically, quaternions came about as a way to try to reason about three dimensional physics. I mean, complex numbers were obviously really nice -- two dimensional numbers you could meaningfully add, subtract, multiply and divide. But they were only 2-D and we live in a 3-D world and we want to do 3-D physics.

So Hamilton was trying really hard to find a way to have 3-dimensional numbers that behaved nicely, and he couldn't do it. But he did find 4-dimensional numbers -- the quaternions. And they were really neat. You can use them quite well for classical mechanics, and electromagnetism, and even special relativity. So, why don't we?

We look at Maxwell's equations of electromagnetism today, and they're really nice, single-line vector formulas. You can also write them as nice, single-line quaternion formulas. Our notion of vector didn't exist at the time the quaternions were first used, and it was a boon to have quaternion notation to simplify some of these physical laws. Vectors and quaternions competed for a bit, and vectors won since they generalize to arbitrary dimensions.

Hidden inside of quaternion multiplication, you can find the three-dimensional versions of the dot product and cross product. And they do have some theoretically interesting properties for number theory and abstract algebra. In the end, however, sometimes items are discarded in favor of better items. I'd rate quaternions as one of the coolest items that ultimately wound up in the discard pile.