In the Drupal project page form there is a Project Resources section which includes the ability to add links to, you guessed it, project resources, things like Homepage, Documentation, Screenshots, and a Demo Site.
I only have a few modules that I have contributed to Drupal, and even the ones that I have contributed do not get much foot traffic. Still, I strive to be a good module contributor and maintainer, by doing things like writing good documenting in and outside the code. I also like to have links for all the Project Resources. This is not always possible. Often people (myself included) just link the Documentation to the current README.txt file in the CVS repository. I have started just linking the Changelog category to the CVS messages for the module.
I have always wanted to be able to have an actual place to demo my modules without linking to this specific site. But I never wanted to spend the time both initially and ongoing to create a demo site for each module. It's a fair amount of work, and there is always the issue of security, and concerns of users creating offensive content. So, I never did... until now!