Summary
While LED (light emitting diode) technology is used in a number of ways in displays, the overwhelmingly common use is in backlighting of consumer LCD displays. LED backlighting provides a more power-efficient method for providing the backlight illumination that is needed to see the image created by LCD displays. LED backlighting is more power-efficient (environmentally greener), has the ability to improve dramatically the perceived performance of LCD displays, is less likely to fail catastrophically unlike traditional cold-cathode fluorescent (CCFL) backlighting, and has the added green benefit of reducing the amount of hazardous materials that are used in manufacture.
Analysis
LED backlighting, at the simplest, is merely an illumination source to allow images generated on the LCD panel to be viewed by the user. LCD panels are much like shutters or blinds on your windows - they gate light by applying an electric field to crystalline material deposited on the rear surface of the screen's glass. But instead of one shutter for the entire window, there are hundreds of thousands or millions of tiny shutters, all lined up in rows and columns, and each individually controlled. Color is created by putting color dyes into the crystalline material, so that white light passing through the dye is filtered to produce the desired color.
It is the quality and source of that white light that is important to energy consumption of the entire display and the quality of the image displayed on the screen. For LCD TVs and monitors, the traditional source of that white light is from cold-cathode fluorescent lamps (CCFL) located behind the LCD panel. These fluorescents are functionally similar to the fluorescent lamps used in your home or office. They can be sensitive to mechanical shock, they have lifetimes over which there is a degradation in output brightness due to phosphor damage, and there are significant issues in disposal of the device at end of life due to the use of various toxic metals in the fluorescent tubes themselves.
LED backlighting provides a far more controllable viewing experience, as well as being able to enhance the performance of moderate quality LCD panels especially with respect to contrast (the perceived difference between dark and light areas). With modern LED backlighting drivers, it is possible to rapidly modulate the brightness of the backlight in specific areas of the display - so the viewer watching a movie that depicts a scene at night can enhance the dark backgrounds by turning down the brightness of the LEDs providing the illumination for those areas. So a moderate quality LCD panel can appear to have a similar quality of a higher cost LCD panel that uses CCFL technology. And, a high quality LCD panel will look even better with controllable LED backlighting.
Finally, use of LED backlighting generally means a far thinner panel, much more suitable for hanging on the wall and with better esthetics.
OEMs like Vizio stand to gain from use of this technology especially because of the improved performance and the ability to use moderate quality LCDs. Companies like Freescale and others offer the controllable LED backlighting.
Finally, there's probably some confusion over the several uses of LEDs in display devices. The current overwhelming use case for LEDs in consumer TVs and monitors is strictly for backlighting. But there are other ways to use the LEDs to actually create the image itself and eliminate the LCD panel. This method is now ised at sports stadiums and roadside billboards to create the bright, extremely large displays that show live video or other action. The last use of LEDs is a technology called Organic LED (OLED). This technology, still extremely young, allows the ability to "print" huge quantities of microscopic LEDs onto a surface and then display images. This technology right now seems to be constrained by fabrication issues to small displays that might be found in handsets.
