Not recognized by bash (or as an argument to cd) on Ubuntu 9.04.
I would expect this to go up the directory tree, not back, similar to 'cd ..'.
As for why you would want something like this as opposed to a more cumbersome syntax that works for an arbitrary number of directories, the answer would seem pretty simple. You often want to go up one or two directories (and therefore want a simple command to do so), but rarely or never want to go up, say, 15. When jumping way up the directory tree, I just enter a path rather than construct some 'cd ../../../../../../../../../' monstrosity and hope I counted correctly.