Is it a significant measurement of how good a developer you are (in other words, do employers look at it)?
From the years I was on the team, if I improved at anything, it was the ability to look at a problem, and solve it. I've gotten to use little bits of it in the year and a half I've been working, but it was more the experience I found profitable and would encourage anyone to do the same.
Disclaimer: I was on the UCF programming team for 5 years.
If you're in school and have the opportunity to participate in a club or practice by yourself, I definitely recommend it.
I'm not sure if employers look at it. Of course, if you get into the higher ratings, it's a nice thing to have on your resume. It also depends on the employer as well, I remember for instance one of the founders of LikeALittle was a TopCoder India champion, so for a startup like that, TopCoder experience might be something that they find interesting.
Being high-rated in these competitions requires quite a high amount of practice and participation, so in that time, you could've been learning a lot of new skills and building things.
However, knowing a lot about algorithms can be very useful in many situations as well. And for instance, Google has those (in)famous algorithms questions in their interviews, so I guess you'd be more confortable in them.
You'll probably screw up the first few times you participate; that's pretty normal, so don't let that get you down!
Of course you can do the archived problems for practice, but starting with live matches is much more exciting.