@Joshua States it is mostly used for aluminum, yes, but is also used for magnesium and a few niche applications. It can also be used for rusty steel, but youre better of just cleaning the steel and using DC.
The reversing polarities of AC have an inherent cleaning action, cutting through the oxide layers which melt at much higher temperature then the base metal itself.
One assumes you could just clean metals like aluminum or magnesium before welding, but they form an oxide layer immediately on contact with air, which means any time between cleaning and welding just builds more oxide, and these metals are very touchy about welding with oxide layers present.
During the electrode positive (EP) portion of the AC cycle, the current is flowing from the workpiece to the electrode, thus "blasting" or "pushing" the oxide layer away. The electrode negative (EN) portion of the AC cycle then has a clean section of metal to fuse, free from oxide, when the current pushes from the electrode to the work. The shielding gas used (argon or helium usually, depending on the situation) prevents more oxide from forming by pushing away the ambient air, forming a cloud of shielding gas, essentially.
Keep in mind that many, many AC cycles are happening every second, and you can adjust the number of cycles per second on most higher end machines, as well as the balance control, which is whether it favors more cleaning or more penetration (EP or EN, respectively.)
You want to use as little EP as possible, if you can adjust it. EP tends to cause excessive heat build up, which is not good for your tungsten or your material being welding.
A quick note on shielding gases; argon, which is heavier than air, is typically used when you're welding downwards, like on a welding table. This encompasses 90% of all TIG welding, I would bet. But this is so the heavy shielding gas is pushed down onto the weld. Helium is used if you're welding above yourself, so the light helium rises up into the weld.
Hope that wasn't too long winded. I'm having flashbacks to welding school .