This is a relatively recent addition to kana usage to represent the non-native sound vu. As such, this is only found in borrowed words. Many speakers, especially older people, may pronounce this more as bu, [bɯ̟ᵝ].
The sound vu appears almost exclusively in borrowed words, and is therefore normally written in katakana as ヴ(vu). This hiragana character is used much more rarely, and exists in computer encodings primarily for correspondence with the katakana form.