I like Saeviomagy's breakdown of the uses of alignment. I will go one step further and say that the most most basic use of alignment in a D&D game is the mechanical aspect of determining game effects: who is affected by holy smite, who takes extra damage from an Anarchic weapon, who can be a druid. If the DM wants, alignment can simply be a mysterious connection to the basic forces of the universe and be completely unrelated to a character's actions and beliefs. So, a character can be a mass murderer who is responsible for the slaughter of thousands of innocents and still retain a "good" alignment (and could never become a blackguard) because he has a natural connection with the forces of good.
However, many DMs and players may find this a difficult concept to swallow, because they believe that actions should influence alignment. If the DM and players agree that actions do influence alignment, then the descriptive part of alignment comes in. Someone (usually the DM) must judge whether a character's actions are generally in line with his alignment. If not, he may decide that an alignment change, and the consequent game effects, is in order.
Still, while the DM may judge, it is not his prerogative to dictate a PC's actions. That is entirely the province of the player. This is where the third aspect of alignment comes in. A player may choose to use the alignment of his character as a guide when deciding what the character's actions are, especially if he has abilities or equipment which depend on alignment to function. Of course, if he decides to act in a way which the DM believes is contrary to his alignment, he runs the risk of losing access to those abilities. Unfortunately, this is a natural consequence of actions influencing alignment.
Perhaps the only point I would like to add to the D&D alignment system is that everything should default to Neutral. A highly complex character with a truckload of competing motivations and beliefs would be Neutral simply because he cannot be classified as anything else.