Hmmm:

A complex LED flasher? Maybe one that instead of flashing, smoothly fades the LEDs in or out?

Want to run that lawnmower more efficiently and cleanly? Be the first on your block with a mower that has an onboard engine management controller.

Of course: robots, robots, robots.

A Newton's laws demonstrator that times how long it takes from when you release it to when it hits the floor and uses that to calculate the initial height. Bonus points if it displays G force when it hits the ground so you can experiment with different types of padding.

A temperature controller for your overclocked game machine?

And that's just simple hobby stuff without even getting into real industrial uses!

I love being a hardware hacker!

Am I right that most uses of this would rely on plugging in sensors and other devices for it to monitor or control?

Yes, it's just a computer, albeit a very specialized one. And like any computer, it's useless without I/O

yes

At $4, I'm going to order one first, and figure that out later.

Blinking LED's! Blinking blue LED's!

I'd probably start with something like a DIY lucid dream mask.

http://cre.ations.net/creation/face-mounted-lucid-dreaming-m...

I work in a physics lab. It would make a nice little controller to run some of the stuff we make. Eg.: for one of our microscopes it could display some parameters like the rotation speed or scan frequency (with eg. a PLL to measure frequency), automatize the start-up process, do a shutdown if temperature goes too high... right now this is all mostly manual.