First let me quote their About page:

Vimeo is a thriving community of people who love to make and share video. From simple moments to masterpieces, Vimeo is the perfect home for you to upload, store and share all the video you create. Your video’s quality and security is important to us, and that is why we’ve built advanced privacy options, sharing tools, and high quality video encoding. So whether you are an amateur filmmaker, proud mom, restaurant critic, or just a guy with a cellphone, connect with Vimeo today.

Let me add this: I think there are many communities of people who love to make and share video. Hmmm, so what makes Vimeo special? Let’s see…

1. Looks. Vimeo looks a lot better. It definitely has the “trendy” design style of all the new (and old) 2.0 sites out there. Sometimes, all those background colors kinda got in the way of content in my opinion (but what is this site, if not my opinion).
2. Seems to have better options for me posting vids for just my friends/family to see.
3. Groups. Vimeo lets you join/create groups of people with similar interests. Or I could create a group for just people in my extended family, and we could post home movies, etc. – and only people in my group (who I invite, by the way) can see the vids.
4. Looks. Let’s get back to looks – Pretty sweet, I was uploading a video, and very easily changing all the properties (privacy, credits, info, groups) while it was uploading…and it looked great. Very easy to use, and well organized info.

Bottom line: You may not get some of the traffic to your vids that other video sites get,  but sometimes, that’s exactly the point.