I've always been perplexed by Squidoo as well it looks like a glorified search engine to me but I figured I must be missing something.
So I finally went to Wikipedia to see what they had to say.

This is what I found (admittedly, perhaps someone who actually uses the site could give you a better, more personalized notion of how it works):

"lenses --single pages that highlights one person's point of view, recommendations, or expertise. Lenses can be about anything, such as ideas, people or places, hobbies and sports, pets or products, philosophy, and politics. Lenses aren't primarily intended to hold content; more emphasis is placed on recommending and then pointing to content on the web. Annotation and organization and personalization delivers context and meaning.
Users who create lenses are called lensmasters. A lensmaster uses the tools available online to provide links, feeds, abstracts, and lists to users who are trying to make sense of a topic. For example, a single lens could point to Flickr photos, Google maps, blogs, eBay auctions, YouTube videos, and other links. Lensmasters are encouraged to promote personal agendas, expertise, causes, products, and opinions."

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