Sandalwood is one of the most valuable woods in the world, largely because of it's rich and mysterious scent.  Sandalwood is used in incense, perfumes and soaps.  This scent is used in religious and magical ceremonies, usually in incense form.  It is said to be helpful for protection and healing and to help bring one closer to the divine.  In Hinduism, sandalwood paste is used to mark religious objects and icons.  Buddhists often use sandalwood incense and it is said to transform ones desires (I would assume from materialistic desires to more spiritual ones) during meditation.  Zoroastrians give sandalwood twigs to the fire priests to burn.  Sandalwood was used in the embalming formulas of ancient Egypt.  Aromatherapists recommend using sandalwood, especially during meditation, to induce relaxation and calm.
    In India, temples are often built from sandalwood because it is resistant to ants.  When mixed with rose, it makes attar, a traditional perfume.
    Medicinally, sandalwood is an antiseptic and stimulates growth of white blood cells.  It is one of the oils recommended in my book of traditional Chinese medicine to make a massage oil for the area around the eyes to treat glaucoma.