It can be anything you want. Create a blog where you can write about stuff you like. Create a database for your recipes. Create a gallery for your photos. Create an index for music/movie collection. There are lots of possibilities.
All of the things I just mentioned can be done very simply, but do also have plenty of potential for making more advanced and feature rich.
If you actually want a website that is externally accessible then you do need to purchase a domain name and hosting. However, you can also run a webserver on your own computer for local development. I'd recommend developing locally under any circumstances anyway. You can install the individual components (Apache, PHP, MySQL and whatever you need) manually, or you can use prepackaged bundles such as XAMPP or WampServer on Windows, or MAMP on OS X. Linux based operating systems will have a package manager which you can use to easily install a web server.
Thanks again,
I've always wanted to create a website that posted a list of my fav movies and tv shows and along with redirecting links to where people can download them, but I thought it was illegal.