What is the purpose of useContext?

It lets you share data with components deep in the tree without passing props by hand through every level.

The problem:

App
↓ user
Layout
↓ user
Page
↓ user
Header
↓ user
UserMenu

That's prop drilling.

Context lets you skip the components in between.

Typical uses:

• theme,
• the logged-in user,
• language,
• permissions,
• configuration.

And a very useful practical example: libraries use the Context API too.

Material UI:

<ThemeProvider theme={theme}>
  <App />
</ThemeProvider>

MUI components further down read the theme without props being passed by hand.

React Hook Form:

<FormProvider {...methods}>
  <Form />
</FormProvider>

and later:

const methods =
  useFormContext();

That's a great example in an interview, because it shows Context used in real libraries.