What's the application? Telecommunications, namely, the sending of messages over very long distances by encoding them in light pulses which are sent over optical fibers.
What problem(s) is it the solution to? "How can we send large numbers of messages from one place to another more efficiently than with electrical pulses sent down copper wires?"
How does it work? The concept is dead simple: You take a signal and encode it in light-- this could be analog, like the SpectraSound demo LaserFest is selling, with higher intensity meaning higher signal, or it could be digital, with a bright pulse for "1" and nothing for "0"-- then point the light in the appropriate direction, and let it carry your message. The big advance is the use of fiber optics, like those in this gratuitous picture (click for the original source):
Fiber optic cables are thin glass fibers that will carry light along the fiber in much the same way that wires carry electric current. The trick is to make them out of two kinds of glass so that the light reflects off the boundary between them, never leaving the fiber. That way, you can send light signals over arbitrary paths, and not just along straight lines. String optical fiber networks between major cities and countries, and hey, you've got a high-speed communications network.
Why are lasers essential? For light to propagate any significant distance down an optical fiber, it needs to enter the fiber in a narrow range of angles. Efficient operation-- that is, getting most of the light into the fiber where you want it-- thus requires a laser, which produces light in a tight beam. You really, really don't want to try to couple incoherent light into an optical fiber.
These days, most telecom applications use fiber lasers, which produce light starting within optical fibers. You can also get fiber amplifiers, which use special glass doped with erbium (or other similar materials) and pumped by laser light to amplify signals that are in the fiber. These take the place of signal repeaters that would otherwise be needed to receive the signal, boost it electronically, then send it again with a new laser.
Why is it cool? If you're reading this, you have lasers to thank. Unless you're sitting outside my office window, reading over my shoulder as I type on my local desktop. In which case, get off the roof, you freak.
Pretty much all of the traffic on the Internet these days passes over fiber optic lines at some point, which means it's sent by lasers. Lasers allow much more efficient communications (a light signal in a fiber will lose some intensity as it travels, but will go much farther before needing to be amplified than an electrical pulse in a copper wire), and higher bandwidth communications. Without laser telecommunications, you wouldn't be able to download images, music, and video files as quickly as you can these days, which means the Web as we know it would not exist.
Why isn't it cool enough? It allows you to download images, music, and video files over the Internet without needing to pay record and movie companies exorbitant sums of money for them, you dirty hippie pirating bad person, you.
You really, really don't want to try to couple incoherent light into an optical fiber.
Unless of course you removed the outer cladding, replaced it with a custom coating and use the differences in absorption as a really nifty sensor.
i want Ph.d thesis on this topic and what we do in future