"gems" are only generated when bought with $ from blizzard.
Players can sell gems for Gold to other players
Players can buy gems for Gold from other players
Gems can be used for server xfers/race change/faction chage/pets/mounts/subscriptions
The more people selling gems the less gold they cost
The fewer people selling gems the more gold they cost
Benefits: Cuts down on gold sellers, allows people free (someone else pays) server transfers/faction change/race change/pets/mounts/gametime
Cons: noobs would scream pay to win even though its not.