There are different types of ADR, but the two big ones are mediation (which is typically non-binding), and arbitration (which is typically binding).
Generalizations are difficult to make, but anytime the parties can resolve an issue among themselves - even if the help of a mediator is necessary - it's frequently better than the uncertainty associated with leaving it up to a judge or arbitrator. Overall, mediation is typically faster and cheaper than arbitration, and arbitration is typically faster and cheaper than litigation. Arbitration, even when run by the AAA, can start to resemble litigation if the issues are complex; that is to say arbitration can require litigators, discovery, depositions, etc., just like traditional litigation.
However - remember - for any ADR to work, both parties must be incented to resolve the issue in dispute in a timely fashion. That is NOT always the case. Many times, the "Goliath" in the dispute would prefer to litigate a dispute knowing that they can simply crush their opponent by filing motions, and running up substantial legal bills that they can afford. That is an unfortunate strategy employed by many big companies, known loosely as "winning the ground war."
PS: Many disputes require ADR, such as certain disputes involving NASD members, etc.