A tool to escape and encode streams. This is useful for people who may want to put a file or set of commands somewhere, usually in a somewhat unorthodox manner. By unorthdox, I mean halfway illegal. This tool is for penetration testers.
You could for example, pass Houdini a full EXE file, get some output that can be embedded in a PHP script, and then write some code around that to write it to a file and run it. Sometimes you have to do stuff like that. This is for those times.
It also does URL and HTML encoding, for if you ever need to cram a payload in a GET request.
Use your imagination.