It's for the user packages. This way you can keep the system profile lean for fast updates of the kernel and such, and then update firefox and other things separately. With Guix they have had manifests for a while, which are integrated into Guix proper and are like the package half of Home Manager (not the config stuff). I only keep a handful of things installed as system packages, and then I have probably 100 or more things in my manifest.scm file. As my user I apply this manifest and it will install or remove things as needed. No root privileges needed.

My primary use-case for Home Manager is dotfiles management. This way I can keep them consistent across all machines and development containers (managed with NixOS declarative containers, so Home Manager configuration is applied on container startup).

With Home Manager, you can share configuration between NixOS, non NixOS Linux distros, and macOS.