Confused about function of "lists"

For me, as a beginner, it is hard to find information, what are lists for.
Is it like a folder for yourself to group your followed accounts? Or to promote other accounts? Or is it for communication inside a list?

I’m confused. The documentation only explains the code to create lists. I think for end-users there should be a brief statement about the purpose and usage.

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Lists function almost exactly as Twitter lists do. Allow you as a user to add Mastodon accounts to a list and browse a feed of only those users on those lists.

thanks. I’m not a heavy twitter user so never new this function.
I still think that documentation should be improved, by anyone confident in properly describing that.