[TillE]

I feel like I'm missing something, but I can't quite understand the advantage of Bitcoins in this kind of scenario.

Who's handling all the instant real money conversions, and why wouldn't they just transfer the real money between accounts directly rather than converting it?

[BoyWizard]

It's not that instant real-money transactions are happening, but if I owe you $5 USD, I can say "I'll pay you 0.1142BTC" and the value to you is the same (as others have said, as long as the exchange rate doesn't fluctuate too much)