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I am working on an NSF (in the USA) project report now and wondering what users end up using this information.
You can read about the federal requirement to have RPPRs ("progress reports") in the Federal Register. Here's the page for NSF. In general, what you provide will be used to determine if you are making sufficient progress in order for them to provide you and your colleagues (if you have collaborators) with future funding. It also records the outcomes of their funding which they may publish to the public. Further, in the event of an audit of your expenses, they will reference your RPPRs to see that your personnel, travel, and publication costs are sufficiently referenced within your RPPR as relevant to the grant. You can find such "performance audits" on the NSF website.
I would absolutely consider that failure to take the RPPR seriously can permanently damage your reputation with a funding agency, and result in them requesting your removal from a project. I have seen NSF do this in the last year at a top university; they requested we substitute the PI for a new one simply to have the RPPR filed and we would then return the remaining unspent funds (~$200k).
More specific information from the PAPPG (which you should be very familiar with if you have NSF money) should answer your other questions:
NSF requires project reports for all assistance awards. Information from these reports is used in annual reports to Congress to demonstrate the Foundation’s performance as mandated by the Government Performance and Results Act (GPRA) of 1993. These reports also provide NSF program officers and administrative offices with information on the progress of supported projects and the way these funds are used. Information in these reports may be made available to the general public through the Freedom of Information Act (FOIA). These reports are fully consistent with and implement the Research Performance Progress Report (RPPR), which is the government-wide standard for use with research and research-related activities. Except where another format is approved by OMB for use by an NSF program, this means that the ‘‘where practicable’’ requirement specified in 2 CFR §200.329 is not required as the RPPR does not relate financial information to performance data.
Please also consider that people who have committed fraud via RPPR have been arrested by the feds.
