"Tell me about yourself."
That's probably the most sweat-inducing, sphincter-clenching question you're likely to hear in a job interview. Or on a date. I'd imagine the same sinking feeling would come on either occasion, unless you're a proudly chatty narcissist.
Why do people ask and how do you answer? Do they really want to know or are they trying to catch you off-guard?
I've interviewed people and I've even been on a date, but I've never asked that question. For a start it's too personal for my British sensibilities (I like to find out very personal information about somebody after we've been friends for about five years. Or preferably, never.). Secondly, it's ridiculously broad. Do you want to know why they want the job, what food they like, why they're here right now, or would you prefer their unedited life history?
The best way to find out about somebody - or tell somebody about yourself - is to be clear and honest.
If you've got a business or website, it's an awfully good idea to tell people what it's about and what they'll get out of being there. Don't waffle, just cover the important information without making them feeling like they're being subjected to a lecture.
Think about questions you might want to ask and answer them:
How much is it?
Why do you want to work here?
How can this help me?
Why should I listen to/hire you?
and so on.
If you're the one asking the questions, do the same: stick to specifics. Don't play games - it doesn't help you find out about a person and ends up making you look a bit smug.
Even small changes in wording can make a huge difference.
When I'm teaching, students sometimes want to ask me questions to get to know me a bit more, and a common one is "what do you like?" That's really open, as I like lots of things from sandwiches to reading books. To avoid potentially awkward answers like "I like being tickled with a single chicken feather while being called Mary", simply changing it to "what sport/food/etc do you like?" makes it much easier to answer.
If somebody asks you to tell them about yourself, don't be afraid to clarify what they want to know. Don't be intimidated. Show that you're happy to answer, you just don't want to waste their time.
The same goes for whichever side of the relationship you're on - interviewer-interviewee, client-service provider, customer-sales staff, or whatever - asking questions to clarify things, and providing clear, honest answers benefits everybody.