I use this for about 5% of our investments (actually ZROZ because that trades free in my employer's broker of choice, but I recommend EDV instead).
First lets cover the risks. It's expected return is lower than that of stocks: subtract inflation from EDV's yield and from the S&P500's 10 year average earnings yield, and then add 0.5% to the S&P earnings yield for an idea of the difference. It is more volatile than the stock market as measured by standard deviation of returns. Stock market crashes typically bottom out in a few years and recover in three times that long, -ish. Long term bond markets can take decades to bottom out, and decades more to recover. For example, the US bond market went downhill for more than 4 decades ending in 1982, and took more than that to recover it's inflation adjust losses (no figure off the top of my head). Depending on the reason for the crash (hyper inflation, lost a war), bonds may never recover, ever. Bonds are more likely to go to absolute zero than stocks are because there is nothing under them. They offer diversification if a country and its currency are viewed as solid while the economy goes through a temporary rough patch, however if the country or currency are in question they may decline at the same time as stocks and more sharply. Even in ordinary times its correlation to the stock market has been more like 0, meaning sometimes it was useful and sometimes not.
Benefits: The most famous is low correlation to stocks, and strongly negative correlation in certain recent crashes. You may be able to sell it at a peak and use that to buy the bottom of a stock market crash. If it reoccurs it could easily make EDV worth the effort. In a continued deflationary environment (faith in the currency becomes increasingly strong, and perhaps faith in the market weakens) it can have huge gains, as Tyler's blog post discusses. If you view this more like a stock holding, in other words your plan for it involves a horizon of 25 years or more (the fund's effective duration or longer), then it is arguably the most appropriate bond choice. If you dollar cost average into it through regular purchases you give yourself lets say a percent greater expected return than its coupon, and dollar cost averaging essentially reduces its duration giving you a greater return to the amount of risk than it appears, and also possibly compared to most investors who are already "haves" while you are a "have not".
Uses:
First try to keep it in a tax advantaged account. I recommend not more than 10% of asset allocation go to this. It is best if your investments are mostly stocks, or you are following an all weather type portfolio. As you get closer to spending down your 'stache, begin adding a safe "barbell" of ibonds, money markets, short term bonds, short term CD's, and similar short term investments. Eventually you should have an equally sized safe barbell (it does seem the actual all weather portfolio does not have a safe end, but I do not know enough about the explanation behind it to know if there is an assumed cash stash somewhere).
