NFTs have evolved into at least four categories.

First, there are name NFTs like yourname.eth. These are the easiest to understand because they are just like domain names or usernames.

Next, there are profile NFTs like Bored Ape. These have value because they are like club memberships, and people make them part of their public identity.

Next, there are Zora-style content coins like horse (see reply), which update the art NFT model by setting up a market for every Instagram-style post. Buyers buy these coins to show appreciation for the creator, to speculate on how much more popular a given post will get, and sometimes to show (via onchain timestamps) that they’re early to spotting new talent.

Finally, there are micro-NFTs that just represent onchain data, akin to “typed likes”. Many social actions are now cheap enough to record onchain.