VWAP divides the total dollar value traded by the total shares traded, so prices where a lot of business was done count more than prices that were touched briefly. It answers the question "what did the market actually pay today", which a simple average of highs and lows does not.
Institutions use it as a scorecard. A desk given a large order to work is judged on whether it bought below the day’s VWAP, which is why so much algorithmic execution is explicitly designed to track it.
Traders read it as a fair-value line. Price persistently above VWAP with the line rising describes a session buyers control; repeated rejections from below describe the opposite. It resets each session, which is both its discipline and its limit.