It's quite simple, actually. The average daily costs for all of the cities and countries around the world come from other travelers.
Here's how it works:
These average costs can then be used by travelers as a starting point and a guideline to determine their own travel budgets. While everyone can and will spend a different amount of money each time they travel, it helps to know roughly how much everything costs in a foreign country before arrival. After all, lunch in Laos is a lot cheaper than London. Knowing the relative travel prices between countries can help everyone get the most out of their travel budgets.
It's like a Wiki for travel costs.
So, by signing up and entering your expenses, you can contribute to the average costs and help other travelers. Of course, you also get to organize your budget and see charts, graphs, and tables of your trip finances. You'll even get to view a map of where you went.