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When you buy Skype credit you can use it to call out from Skype on your PC or iphone/smartphone to normal phones (wireless or landline) at a really good rates rate. Also you can get a "Skype-In" phone number so people can call you as if they are calling a land line

More information courtesy of Wikipedia

Calls between Skype and landline/mobile phone numbers Skype users can call landline and mobile phone numbers (previously known as SkypeOut) using Skype Credit or a calling subscription. Additionally, users can purchase Online Numbers (previously called SkypeIn) that lets contacts call their Skype client from a landline or mobile phone.

Outgoing calls SkypeOut allows Skype users to call traditional phone numbers, including mobile phones, for a fee. This fee is as low as US$0.021 per minute for most developed countries, and as high as US$2.142 per minute for calls to the island Diego Garcia. Beginning January 2007, Skype also charges a €0.039 connection fee for each SkypeOut call.[1] After 180 days of not making a SkypeOut call the Skype balance expires; however, it can be reactivated. From 15 May 2006 to 30 January 2007, SkypeOut calls to Canada and the United States were free, but that was a promotional program and it has expired—those calls are no longer free.

SkypeOut calls to most toll-free numbers in France (+33 800, +33 805, +33 809), Poland: (+48 800), UK: (+44 500, +44 800, +44 808 ) and the United States and Canada: (+1 800, +1 888, +1 877, +1 866, +1 855) are free for all Skype users, even if they do not have the SkypeOut service.[2][3] However, for many other countries SkypeOut doesn't support calls to toll-free or premium rate numbers, and SkypeOut doesn't support calling emergency numbers such as 1-1-2 in Europe or 911 in the United States.

Quality of service is not guaranteed, and drop-outs, broken connections, and compression distortion are frequently observed by users.[citation needed]

Support for the above toll free numbers in Canada has been effectively removed since January 2012.

Caller ID for outgoing calls Skype advertises a feature allowing users to set the caller ID for outgoing calls to normal telephone numbers. Set-up verification involves sending an SMS text message to a selected mobile phone number, then typing that verification code into a web form. Since most regular home and business telephones cannot receive text messages, this feature is only available to owners of mobile phones.

However, according to discussions on Skype's user forums and other forums on the Internet, SMS messaging from Skype's system has not been working correctly in various locales since at least June 2008.[citation needed] Although Skype maintains that the problem has been corrected, SMS continues to be inoperative as recently as July 2009 in the United States and Canada. During the verification process, the Skype Web site makes it appear as if a text message has been sent to the user's mobile phone, and an appropriate fee is deducted from the user's Skype credit balance, but no text messages are actually received on the phone. Since many individuals and business refuse incoming telephone calls whose Caller ID has been blocked, this hampers the utility of Skype in calling normal telephone numbers.

Online Numbers A feature named Online Number (until 2010 named SkypeIn) allows Skype users to receive calls on their computers dialed from mobiles or landlines to a Skype-provided phone number. The number need not be in the same location as the user. For example, a user in San Francisco could create a local telephone number in Helsinki. Callers in Helsinki could then make a local call to reach that user (who answers on Skype in San Francisco).

Skype offers numbers in Australia, Chile,[4] Denmark, Estonia, Finland, France, Germany, Hong Kong, Hungary, Ireland, Italy, Japan, Republic of Korea, Malta, Mexico, Netherlands, New Zealand,[4] Poland, Romania,[4] South Africa, Sweden, Switzerland, the United Kingdom, and the United States.

In Russia some third party companies, including SIP operators, provide direct numbers, redirecting calls to Skype.