If GIF support is enabled, GIF output is chosen by using the `dvigif' binary or with the `--gif' option.
It is intended to produce anti-aliased screen-resolution images as fast as is possible. The target audience is people who need to generate and regenerate many images again and again. The primary target is the preview-latex (X)Emacs package, a package to preview formulas from within (X)Emacs. Yes, you get to see your formulas in the (X)Emacs buffer, see `http://www.gnu.org/software/auctex/preview-latex.html'.
It is also used in MediaWiki, the software behind Wikipedia and many other wikis out there. Dvipng is used to render mathematical formulae from version 1.8.0 of MediaWiki, see `http://www.mediawiki.org'.
Other applications may also benefit, like web applications as latex2html and WYSIWYG editors like LyX.