Rainwater harvesting is collecting water from roofs or clean hardstanding instead of getting it from the mains or abstracting it from rivers or groundwater. This is appropriate in some parts of the world, such as western Britain, where there is plenty of rain and where conventional water resources are at risk of being over used to supply the large populatioon. Rainwater harvesting can reduce the consumer's water bills and can reduce the need to build reservoirs, which can take up lots of scarce space.
Rainwater harvested from roofs can contain animal and bird faeces, mosses and lichens, windblown dust, paticulates from urban pollution, inorganic ions from the sea (Ca, Mg, Na, K, CL, S04) and dissolved gases including C02, NOx, SOx.
Harvested rainwater can be used for flushing toilets and for laundry. Indeed in hard water areas it is superior to mains water for this. It can also be used for showering or bathing. As rainwater may be contaminated, it is not suitable for drinking without treatment. However there are many examples of rainwater being used for all purposes including drinking following suitable treatment.
Two residences in the city of Toronto, Canada, use (treated) harvested rainwater for drinking water, and reuse water (i.e. treated wastewater) for all other household water applications including toilet flushing, bathing, showers, laundry, and garden irrigation (Toronto Healthy House). In New Zealand many houses outside of the larger cities and towns routinely rely on rainwater collected from roofs as the only source of water for all household activities. This is almost inevitably the case for the very many Cribs or Bach's (second homes of holiday homes) that exist.
For an example showing you how you might build your own rainwater harvesting system, see publunch's fantastic rainwater collection system. (http://www.publunch.plus.com/library/inventions/rwcs.html)