We use it for
Hosting Email through Kerio.
Apple desktop login authentication system, Kerberos . Active Directory Replacement
Samba file sharing.
Intranet Chat Server.
Hosting intranet pages.
Is it really necessary? No. You can probably do all this on a Mac Mini, iMac, Pro with the Unlimited Server License. Xserve is nice since its a 1U server platform, we bought it because it was pretty. Personally I think its overkill. A redhat, centos, ubuntu box running on a Dell PowerEdge would work just as well and much cheaper if you know what you are doing.