Karma is a way to tell who on the forums is a helpful, fun or nice individual. The old Trolling/Insightful ratings were confusing to new users (yes, yes, i know) and the data was all munged and didnt really reflect your activity on a given site. The Karma system allows you to give others Karma if they are fun, helpful or whatnot. You can't take Karma away from people, so there's no more negativity. Only warm fuzzies. However, users who don't deserve Karma won't get it, so it'll be pretty obvious who is helpful and who isnt.
Those who have accelled to a high user level are also able to give people more Karma. So there is some benifit to having your user access level raised as well.