How I Use It
I usually teach a mini-lesson on a new skill, then the students take it away. They are illustrating words right now (5th grade), and the variety of their presentations is great. They have games, movies, and pictures. The students are learning to work collaboratively, and problem solve in a collaborative and constructive manner. That has transformed my classes.
I have used it with 5th grade, but I think younger grades could do this also.
Scratch teaches students programming without them realizing it. It has a drag-and-drop interface that the students can use right away, but has a lot of depth so they can keep learning as long as they are interested. Great for differentiation in teaching.