How can WordPress be used for other types of websites besides blogs?
A lot of people use it as a full blown CMS. You can have your visitors land on any page of your choice, showing the blog as a special page (if at all). It also makes an excellent tool for photographers to publish their work, especially freelance photojournalists.
The other thing that I really, really like about WP is how easy it is to bring existing static pages into the Wordpress 'loop'. I've found it to be an invaluable tool to 'drop in' to existing static sites for clients that want to be able to publish without editing HTML. This brings (at least part of) the dynamic content to all of the static pages.
I think its also important to make a distinction between blogging and more serious self publishing. The first, of course, being more recreational. Wordpress (especially with the latest version) appeals equally to either use.
I've seen quite a few themes that transform Wordpress in a photography portfolio/gallery site.
Because you can have pages (static) as well as posts (dynamic) you can use WordPress to do nearly anything, though it may not be the most efficient vehicle, depending on your needs.
The biggest benefit is separating the data, and the entry & management of that data, from the backend, technical part of the site. This enables non-technical users to create and post the content without having to know any HTML or CSS.
With available PHP functions and plugins, you can bend WP to your will easily by downloading and installing any of thousands available, or if what you need isn't available you can write or commission your own custom work.
WP Pages are technically the same as posts but are treated differently, namely they are static, and have no relationship to each other unless you build it with a hierarchy or a menu.
The new custom post type (really a page rather than a post) is a way to add structure to pages so that you can have standardized information on all of the custom posts of a given type. For example, on a real estate site, you could have a custom post type for houses, that had fields for all the standard features of these properties, like # of bedrooms, etc.
A new item is added to the admin menu for each custom type, so the non-tech content providers can add a house as easily as adding a post.
e-Commerce add-ons to WP work this way, and are all being upgraded to work with the newest version of WP, instead of having their own nonstandard approach.