most smart contracts that deal with tokens (swaps, borrowing, etc) use the ERC-20 standard. WETH is a simple smart contract where you deposit X eth and you receive x weth in return (where weth is a token that adheres to the ERC-20 standard). you can then use that weth to swap, borrow and lend in the same way you would with any other erc-20 token.
most users never have to deal with the WETH contract because defi platforms will automatically do the wrapping/unwrapping for you.
the vast majority of the WETH minted by this contract is used for
a) providing liquidity on DEXs (where ~ 50% tokenA and 50% tokenB are deposited to collect trading fees)
b) collateral in a lending platform (e.g. deposit WETH and borrow USDC)
c) bridged to another chain (e.g. bridge WETH to Avalanche or Solana or whatever)
