Matrices can be used to transform vectors by changing their magnitude and direction. Matrices are useful for applications like rotating vectors, solving systems of linear equations, and encoding/decoding messages for cryptography. As an example, a message can be encoded using a matrix, transmitted as encoded values, and then decoded by the receiver using the inverse matrix. Eigenvectors are vectors that only change in magnitude and not direction when multiplied by a matrix. They can be used to model real-world systems changing over time, like populations of humans and zombies.