First, please dont use all caps. Its really, really annoying.
Second, having multiple dekstops (the number can be much more than 2, i usually have 4 and use 2 or 3 regularly) allows you to organize and arrange your work and applications. I can more easily alt+tab through 3 or 4 apps per desktop over 2 or 3 desktops than i can go through 8 or 10 apps on one desktop.
i also find its very helpful on systems with small monitors, such as laptops, where screen real-estate is valuable.
example: ill keep firefox and pidgin and a terminal open on one desktop, do multimedia (watch a video, play/organize music, whatever) on another, and open up miscellaneous stuff on a third as i need it (say, a word processor or some such). I have a 14" laptop, so this is a necessity. if I had a 19" LCD i wouldnt use the feature *as often* but i still find it useful for organizing what im doing.