Usted (singular) and Ustedes (plural) are used instead of the more informal "Tu" and "Vosotros", when speaking to someone you don´t already know, an older person, a teacher, a boss, or in any formal setting. It´s just a polite way of addressing someone.
To my friend: "Puedes (tu) ayudarme?" (Can you help me?)
To my teacher: "Puede (usted) ayudarme?" (Can you help me?)
Ustedes is the same, in plural, for addressing a group in the same formal, polite way, and is used instead of "Vosotros".
There are also regional differences. In some countries it´s more common than others, and the use even differs from town to town in a lot of countries.
In Argentina they also use "vos" (2.person singular) instead of "tú", with different conjugations.