In this new post to his blog today, Lars Strojny looks to clear up some of the confusion that might be forming around the term "intrusion detection", more specifically, related to projects like PHP-IDS.
PHP-IDS is an intrusion detection tool on the application level. Application firewalls know about a certain protocol and its structure (e.g. HTTP) and inspect the protocol to detect attack patterns. Some of them are even capable of learning from usual request signatures and enforcing rules based on the learned data. There are various commercial products to achieve application firewalling. PHP-IDS does the same for free and sits directly on the webserver in the scope of the application.
He recommends it as a good supplement to the hardening you've already done for your server (you have hardened it, haven't you?) to help keep you and your data safe from prying eyes.