It's both. Everyone using docker benefits from the "software distribution" feature. Some people using docker also benefit from the security and isolation features - it depends on your needs and the security profile of your application. Because the underlying namespacing features of the kernel are still young, it's recommended to avoid running untrusted code as root inside a container on a shared machine. If you drop privileges inside the container, use an additional layer of security like SELinux, grsec, apparmor etc. then it is absolutely possible and viable in production.
It's only a matter of time before linux namespaces get more scrutiny and people grow more comfortable with them as a first-class security mechanism. It took a while for OpenVZ to get there, but not there are hosting providers using it for VPS offerings.
On top of namespacing, docker manages other aspects of the isolation including firewalling between containers and the outside world (currently optional but soon to be mandatory), whitelisting of traffic between certain containers, etc.