What is this?

I've seen this black strip with colors all the time on the side of freight cars but I never knew what it was for.
what does it represent/What is its use?

It was used for automatic car identification during the 1970s. The color code identified the car number, a trackside scanner read it into a computer system which kept track of the cars. The system has since been replaced by RFID tags attached to the cars.

See:
http://en.wikipedia.org/wiki/Automatic_ ... tification

Simply put, it's the very first generation of bar code scanning!