Actually, I too am confused as to why Apple has chosen to make that thing visible all the time and by default. Basically /Network is a place where server admins running Mac OS X Server 10.x can customize various things.
/Network/Library is like /Library, only for things that you want to be available to all users across the entire network (for example, Apple might put Apple Garamond in there instead of installing it on each machine separately).
/Network/Applications is for applications that should be available from the network to all users.
/Network/Users is obviously for all the users folders.
There's a NetInfo manual for Mac OS X Server system administrators available somewhere on Apple.com that describes all of this in painstaking detail.
Given that so few people are on a Mac OS X Server/Mac OS X Client network, I find it odd that Apple make everyone see this all the time. It's like being forced to see all the drives you've ever mounted even when they're not connected. Frankly I think it should not be visible unless you're connected to a network that supports putting stuff in there.
Anyway. Another day, another feedback email.
HTH