The Schoology LMS provides a lot of functionality for free

This web based Learning Management System  looks like a unique value proposition.

“Schoology is a free web-based learning management system (LMS) built on a social network. Schoology leverages the familiarity of popular social media tools to improve communication and collaboration.”

Admittedly, that's not necessarily an extremely unique proposition, since some other LMS apps have some social networking types of features, but what is rather unique is the extent of features available for free in this hosted solution. Check it out:

Academic Features 

• Class Profiles/Webpages
• Create Assignments & Events
• Create Tests & Quizzes
• Manage Gradebook & Attendance
• Online Dropboxes
• Track Student Usage & Course Analytics
• Mobile Applications Coming Soon

Social Features

• Cross-School Networking & Private Messaging
• Group Workspaces for Departments, PTA, Clubs, Teams, & More
• Blogs & Profile Pages
• Personal File Storage / Bookmarking

Management Features

• School, Course, Group & Personal Calendars
• Email & SMS Text Notifications
• Privacy Control & Word Filters

Administrative Features

• Email Address and Username Support
• Single Sign-On (SSO)
• Import / Export Courses, Users, & Grades
• School Vanity URL
• Parent / Guardian Access

So, without having to purchase servers or contract for services (like you do with Moodle), you can have a functional Learning Management System in place. If you really like it, additional functionality, like data integration and more, are available through purchased Add-Ons.

Granted, many schools really need the benefit of data integration between their LMS with their SIS, but not all do. Moreover, if your school doesn't have an LMS and you want to try the functionality out with no investment beyond the time to do a little learning of your own, it looks like you can hardly go wrong an app like this. It will be interesting to see how successful Schoology is over time.

Related Posts (if the above topic is of interest, you might want to check these out):
Learning about Moodle – a leading open source LMS
Etudes.org – a free, hosted Course Management System