From the Bitcoin wiki:

An exchange that enables leveraged speculation in its contract-for-difference (CFD) market against the Bitcoin to USD (BTC/USD) exchange rate.

The service charges no trading fees but instead earns from the trading spread -- similar to how forex trading functions.

This was a powerful (and risky) service to provide to traders as leveraging allowed them to invest in more bitcoins than what they owned, and the contract-for-difference market allowed traders to take a position (gamble?) on exchange rate movements.

There appeared to be a strong appetite for such a service, because it grew in popularity very quickly - it was first mentioned on bitcointalk.org in Sep 2011 and by March 2012 was large enough to be holding BTC43,000 (when it was first hacked).