This nodelet displays a list of all users who are currently active in the Monastery — that is, those who have fetched a page (as a logged-in user) within the last three minutes. The list is not re-generated on every single hit, but is cached (for a short time).
These two factors combine to form a certain staleness factor. On one hand, the list may not show users who have just arrived — including yourself! On the other hand, the list may show users who were active several several minutes ago but are no longer.
The list is sorted by Experience Points (XP), with the more experienced monks on the top.
If you disable this nodelet in your Nodelet Settings, there are still ways you can view the same list. You can visit show_users or ?node=show_users&displaytype=raw which show only the list, or Fullpage Chat which contains a version that is refreshed periodically.
There are ways to fetch login-requiring pages without getting onto the Other Users list. How this works is explained in What XML generators are currently available on PerlMonks?.