So, let's say you're walking down the street near your local Burger King... okay, maybe not... let's say you're walking down the streets of Tokyo, and all of a sudden, you see someone playing Monster Hunter Freedom on their PS Vita. You've only got a lowly PSP, but no worries, sir, they're compatible!
Though this may not be as prevalent or as useful in the States, ad-hoc compatibility is a huge boon for the PS Vita in Japan. Sony could have easily splintered its userbase between the PSP and the PS Vita, thereby pushing their PSP fanbase in Japan to pick up a PS Vita... but they didn't. Good on you, Sony.
(No, I don't know what that means for you, PSPGo. Now go back and play some MP3s.)