Potential Medical Use
There is research being done by Dr. Thomas Prisinzano about changing Salvinorin A so that it is no longer is hallucinogenic but it retains some of its other properties such as the use of Salvinorin A to treat various addictions to drugs like cocaine and methamphetamine. Dr. Prisinzano is quoted as saying:

"You can give a rat free access to cocaine, give them free access to Salvinorin A, and they stop taking cocaine."

There is other research being done into many potential uses professor Bryan L. Roth says:

"We think that drugs derived from the active ingredient could be useful for a range of diseases: Alzheimer’s, depression, schizophrenia, chronic pain and even AIDS or HIV."

There could be properties in the active ingredient that would be active against HIV and cancer cells.
Personal Use

Salvia Divinorum is used by people as a hallucinogenic drug, The motivation for use as described by Brian Arthur:

 "Most of the people who do try Salvia, they are not looking for just some kind of fun party experience: a legal high; they are looking for a kind of transcendental meditation experience."

Also Daniel Siebert, someone who runs a website dedicated to the safe, non-recreational usage of Salvia Divinorum says:

"Salvia is not ‘fun’ in the way that alcohol or cannabis can be. If you try to party with salvia you probably will not have a good experience. Salvia is a consciousness-changing herb that can be used in a vision quest, or in a healing ritual. In the right setting, salvia makes it possible to see visions. It is an herb with a long tradition of sacred use. It is useful for deep meditation and is best taken in a quiet, nearly dark room; either alone, or with one or two good friends present." (The friends should be sober.)

Usage
Salvia Divinorum is traditionally used by chewing the leaf, or making the leaves into a tea; however, recent advances into salvia extracts have made it easy to smoke salvia.
Salvia extract (shown above) is a mixture of wax and crystals, with very little leaf content. It is made by reducing the leafy content of salvia leaf. The extracts have more chemical so that not as much matter has to be smoked which is better for the lungs. The extracts are marked with different concentrations from 6x to usually the highest concentration of 20x. Smoking the prescribed amount of salvia 6x extract would be the equivalent of smoking 6 leaves, but with much less actual smoking.

Some scientists have found that crystalline Salvinorin A (which is a chemical that in a laboratory can be synthesized or isolated from a salvia leaf) can be vaporized and inhaled; however, this is not as safe since the dosing of such a potent chemical has to be very precise. 

Effects
The immediate effects include uncontrollable laughter, past memories, such as revisiting places from childhood, sensations of motion, or being pulled or twisted by forces, visions of membranes, films and various two-dimensional surfaces, merging with or becoming objects (e.g. becoming part of the chair you are sitting in), overlapping realities, such as the perception of being in several locations at once.
There are many short term effects after usage that are both positive and negative; these are experienced after the immediate hallucinogenic experience.

Positive Short Term Effects
Increased insight, 47%
Improved mood, 44.8%
Increased connection with Universe or nature, 39.8%
Increased sweating, 28.2%
Body felt warm or hot, 25.2%
Increased self-confidence, 21.6%
Improved concentration, 19.4%
Negative Short Term Effects
Decreased insight, 1.8%
Worsened mood, 4.0%
Decreased connection with Universe or nature, 5.4%
Decreased sweating, 1.6%
Body felt cold, 6.4%
Decreased self-confidence, 2.4%
Difficulty concentrating, 12.0%
(from Baggott, Matthew & Erowid, E. & F. (Jun 2004), "A Survey of Salvia divinorum Users)

Long Term Effects
Studies have found that there are very little to no long term effects. It was found that less than one percent of people became addicted to it, and even then it was not a strong one. However, not enough information about addictiveness is present to make a conclusive find.
Some people have found that for the next several weeks after taking it they had heightened mood and antidepressant effects. Very few reported a long term depressing effect and lowered mood.
The only salvia related medical concerns are that some people use it to self medicate pre-existing depression and their depression goes untreated. This situation led to one death of Brett Chidester who lived in Delaware; salvia is not illegal in Delaware.
Health Concerns
People who use salvia alone may hurt themselves as a result of losing touch with reality and hitting things.  Thus to safely use it, people are supposed to have a sober person present. Salvia as with any other smoked substance can cause lung cancer if smoked in excess. Also people use it to self medicate their depression which can lead to suicide as the depression goes untreated, and salvia may exacerbate the problem. Driving under the influence of salvia is extremely dangerous.

Final Note
Salvia is not ever recommended for any kind of recreational use. It's best potential lies in medical research as it may prove to be a miracle for sufferers of addiction, HIV, and cancer. The only use outside of that is personal spiritual, and intellectual discovery that is not recreational.

The tragedy of Salvia Divinorum is that there is a growing use of it recreationally; this will most likely cause it to be classified as an illegal substance, slowing or halting scientific research and its deep spiritual usage in meditation and self discovery.