[Late edit, because I just realized none of us answered one of the key questions: "Why do we use it?"]
Lorem ipsum and its alternatives are used for two reasons. The first is visual: we want to set up the text styles but don't have the real text available yet, or we want to show the client (or the art director) a mock-up. The second is practical: dummy text can be used to fill copy space in a layout. If it reflects the word lengths of the eventual copy (normal English writing, academic writing and text intended for younger readers would all have different characters-per-word and words-per-sentence averages), it lets copy writers know what their target word count should be.
In InDesign, specifically, you can replace the default dummy text (which is decent, but doesn't reflect contemporary writing rhythms well) with anything you like. You can, for example, grab a book from Project Gutenberg and use its text.
To create your own custom dummy text, save your choice of text in a file called "placeholder.txt" and copy it to the InDesign application folder. Every time you use Type > Fill With Placeholder Text thereafter, the content of your custom file will be used instead of ID's defaults.