Traditionally, an Impact Factor was used to evaluate how a journal is ranked, in relation to others in the field. In other words, it was a method of ranking similar journals in a field.
Currently though, an Impact Factor is now used to measure both a journal and an author's impact. The indexes or databases used to measure impact use different methodologies, and can give slighty different results. What this means is that it is prudent to use more than one source to get the true picture of a journal or author's impact.
Impact Factors are used in several ways, mostly as an evaluation tool by different groups: