There are some countries that do not recognize a drivers license from the United States, but officially recognize an IDP (e.g. Hungary). There are other countries that honor a United States drivers license, but require a local language translation (e.g. Spain). The IDP can satisfy these types of situations. Keep in mind, however, that while a certain country’s government may not require an IDP, car rental companies located in that country, such as Hertz, may require an IDP to rent a car. Purchasing an IDP prior to departure can save a lot of potential hassles.
NOTE: If you are living permanently in a foreign country, even though you may still hold a U.S. state issued driver's license, you must abide by local driver's licensing laws. Many countries require that you obtain a local license once you take up employment and/or residency.