For our purposes, SDL will be used to handle the interfacing to all input types (keyboard, mouse, joysticks, gamepads, etc.) without needing to mess around with the old DirectInput or hardcoded joystick and mouse drivers. SDL also includes some interfacing with OpenGL, but I don't think we'll be using that part of the lib very much.
"What's wrong with the current controls, anyway?" - to that I say quite a bit. For one, FSO still doesn't support 6-axis controllers nor does it support the mousewheel. By using SDL, we not only gain these controls, but also allow for future devices that have many more axes, buttons, knobs, and stuff (think simulator-grade devices).