When you go to add an Element in a Content Layout Section, the Element dialog opens in a new tab called Layout Elements. This is where you will find the Content Element. These dynamic Elements can only be placed once into a Layout, with the exception of the Pagination Element, which can be placed twice.
The Content Element pretty much does what it says on the can, and allows you to add existing content anywhere in a Content Layout Section in any Layout.
You would use this, for example, on a single post pr single portfolio layout, where the content element would pull the actual post content into your layout. Basically, the element grabs the editor content of a page or post, and you can add this content to the Content Layout Section of your Layout.