What did people use these for in real life? Were they essentially toys or were there peripherals that made them useful for solving problems?
I assure you the Altairs were quite useful. Mostly, owners enjoyed the luxury of working on their very own computer, rather than a time-share machine's account from the corporation or university.
It's difficult to communicate how this felt, in this age of ubiquitous computing. A machine that one could reboot whenever you wanted. Tinker. Explore. They wrote games. Controlled hardware. Learned what made a computer tick. Connect a modem and talk to others. Sure, it was primitive, but at the time it felt as cutting-edge as space travel.
If I recall correctly, the Altair ran CP/M, and could run the early Zork infocom text adventure series.