The lovely thing about an LJ is that, as you say, only the people you want reading your observations, etc are able to read it, if you choose. But if you were feeling particularly narcissistic on any given day, you can do that too! :)

I never had a blog and LJ is the first public forum I can truly call my own. And the freedom to post or not to post (and not have anyone telling you ~ POST!) is quite relaxing for someone like me. Damn, RL time is soooooo limited for me so it's very liberating for me to not feel the pressure to continually put my comments online.

There are probably a gazillion other reasons..... :)