Some types of activities cannot be tracked via the project mangement model. e.g in a software application, a bug is a single piece of work that moves through different "states" like open, verified, fixed, closed, re-opened and so on. Processes like help desk requests, to-do lists, issue tracking, sales lead tracking, leave approval and so on map better to workflow than projects.
The key difference between project and workflow is that while a project is a collection of multiple tasks, a workflow is a single piece of work that "flows" through a series of steps before completion and different people work on the same piece of work. In the bug example, while a developer may fix the bug, another is responsible for testing it.
Benefits of workflow
You can create as many workflows for your business processes. This allows you customize the "process" as followed by your organization.
Define rules for the movement of work. e.g a bug that is "Open" can only be "Fixed" or "Closed". Once "Fixed" it can only be "Tested" or "Re-opened".
Capture custom data as required.
Timeout policies allow you to do things like "1 hour - Gold Support", "5 hour - Silver Support". You can also use timeouts for reminders.
Please read the workflow guides for more details.