The native currency of the Steem Blockchain is Steem (mkt: STEEM). That is the currency we use to transfer around (think ether for Ethereum). There's currently 270++ million Steem in circulation of which our market cap is calculated from.

Steem Dollar is simply said, like a feature to make mental calculations easier. While the price of Steem fluctuates with supply and demand. The price of SBD (Steem-Backed Dollar) will always hover near 1 US Dollar. While there's hundreds of millions of Steem, at any time there is only a handful of SBD around. Since it's function is to circulate and it's never wise to hold SBD long term. If you want to HODL, hodl steem in the form of Steem Power.

There's a mechanism working within the blockchain to balance the Steem-to-SBD value ratio. So say 1 Steem is 2 USD, then 1 SBD willl be 0.5 Steem. This, among other resposibilties, are handled by our witnesses. That is why it's important to make sure to vote for witnesses you are confident in (which is a whole other topic).

In short, SBD is best when purchasing something with Dollar value. Perfect for merchants for example. No mind-numbing conversion ("How much is a dollar of bitcoin? 0.00000078 Bitcoin?") needed. 1 SBD is meant to equal 1 Dollar.