Used to mark up pages of a multilingual site. Using this attribute you can make sure that users have the page displayed in the right language based on the language they use in their query.

They can be used to help with the duplicate content. Sometimes you have a website that has the same content for different locations (like UK and USA), with small variations like currency.  In this way you let Google know which location or language this webpage is optimized for.  Keep in mind though that you will still have to work on link building for each webpage to make sure it has enough authority to be displayed in the desired location.