Launchpad is often perceived to be a project hosting service. Some perceive Launchpad is a directory of packages in Ubuntu. Both views are incomplete and often lead to misunderstandings about how Launchpad can be used, and buy whom. I think the best summary of what Launchpad does is that it hosts open source communities.
From it inception, Launchpad strives to connect communities by lowering the barrier to make contributions to projects. Launchpad does not give any community exclusive control of a project or its parts. It is common to think of a project as being under the exclusive control of one community, and many services model that concept. The truth is more complicated. Successful open source projects often represent the work of many communities. Translators are interested in making all applications use their native language  so they need access to many projects. Users who support applications need to relate questions to answers, FAQs, and bugs. Distribution like Ubuntu need to know the bug tracker and the source code for every project who's work is packaged.
Projects in Launchpad are more like places where communities meet to gather and share information. The communities provide bugs reports, patches, and translations to projects. Communities use Launchpad to learn where bugs are fixed, where the latest code is, what versions of the project's work are available. Even if the project's development community does not use Launchpad's services, they can still use Launchpad to learn what other communities know and are doing.
 Accept for the Esperanto freaks ;)