These were originally invented for rocket fuel: the idea was to mix these directly into liquid fuel, so that a magnetic field could pull them straight into the engine. That eliminates the mechanical pumps that are at the heart of liquid-fueled rockets, which (especially then) were the #1 source of problems. Today, they're used for all sorts of other applications: for example, they're used to create hermetic seals around rotating drive shafts, like the ones in your hard disk, since if you just magnetize the shaft a bit they'll stay in place even as things spin around. Using similar tricks, they're what keep the voice coils of your speaker cool.
Basically, you can find ferrofluids anywhere that it would be really useful to hold some liquid in a strange position as if by magic.
And here is what happens if you take a screw, apply a magnetic field to it, and pour a ferrofluid down the top. It both lubricates the screw very precisely, and looks really neat.
You can learn more at http://en.wikipedia.org/wiki/Ferrofluid .
This image comes from http://www.reddit.com/r/interestingasfuck/comments/391q8w/ferrofluid_on_a_screw/ , and via