What is the Documents & Data item used for in the iCloud preference pane on my Mac?
Well, at the moment, there isn't much to see with that option.  However, enabling Documents and Data sync allows applications on your Mac to sync their data with iCloud, just like iWork on iOS does.  But, most Mac applications have not been updated to support this feature yet (even Apple's iWork suite doesn't support this yet).  However, this does allow applications to sync with any other Macs and iOS devices that you own, so I recommend leaving it on so you are prepared for app updates that support iCloud.  iA Writer is an example of an application that already uses iCloud to sync between both Macs and iOS devices.