The holo-communicator was a new advance in Federation communications technology in the 24th century. It allowed two parties to converse as if in the same room by sending holograms of each other courtesy of projectors installed in the floor.
They were first deployed in Starfleet in 2373 on the bridges of ships such as the USS Defiant and USS Malinche; Captains Sisko and Sanders used theirs for the first time to coordinate their attempt to capture the Maquis leader Michael Eddington. The Maquis had been able to "procure" a holo-communicator of their own, allowing Eddington to use it to contact Sisko during the hunt. As the communicator was installed after the cascade virus that damaged all the other systems on the Defiant, it continued to work throughout Sisko's pursuit of Eddington. A holo-communicator was also installed in Captain Sisko's office on Deep Space 9 at this time, and was used by Odo to communicate with Sisko aboard the Defiant. (DS9: "For the Uniform")
The holo-communicator in Captain Sisko's office was later used to allow him to converse with Rear Admiral Bennett on the matter of Doctor Julian Bashir's genetic engineering. (DS9: "Doctor Bashir, I Presume")
Kurros of the Think Tank used a similar technology which created an isomorphic projection of himself aboard the vessels of potential clients. The projection was sophisticated enough to taste beverages. (VOY: "Think Tank")
Shinzon used a holo-communicator to demand Jean-Luc Picard's surrender in 2379. His device was more advanced, however, as it was able to be projected into an area without holo-emitters and it was impossible to trace the signal back to the Scimitar. (Star Trek Nemesis)
The idea for the holo-communicator was Ronald D. Moore's. According to Moore, "That's something I had been pushing for because I just think it's so absurd that in the twenty-fourth century they have holodeck technology that allows them to recreate Ancient Rome, but everybody talks to each other on television monitors. It's just so lame. The viewscreens have been around for over thirty years. Can't we move to something a little more interesting? But it's like pulling teeth."
Ira Steven Behr was completely behind Moore's idea; "Viewscreen scenes are always difficult to pull off. The longer they are, the more boring they are, and having a character talk to someone on a viewscreen is very distancing. And it did work in this episode. We never could have had Eddington on the viewscreen for all of his scenes. It would have been dramatic death."
Despite this however, the holo-communicator was not seen as successful, something alluded to by Gary Hutzel, "It was a terrible idea from the get-go. The idea was to create this amazing 3-D image, but TV's a 2-D medium, so it's hard to show that it's 3-D. So you have to move the camera around so that audience can see that it's 3-D, but then it could look to them like the guy beamed in. So you have to find a way to deal with that. It created all these problems that the writers hadn't thought about, and it missed the whole point of why Gene Roddenberry wanted a viewscreen: so you could avoid unnecessary expense." (Star Trek: Deep Space Nine Companion)
It would seem that the use of the holo-communicator was eventually discontinued by Starfleet, as it never appeared after "Doctor Bashir, I Presume". Ronald D. Moore has suggested that was moved into the Defiant's ready room for Season six. As for the production reason, he stated that the writers never had a "viewscreen-type scene" that would be more effective with the holo-communicator.  
While the Federation never made use of holographic technology in communications before the 24th century, Azetbur on Kronos One viewed the President of the Federation on what appeared to be a monochromatic holocommunicator. Also, the Cardassian viewscreens on Deep Space 9 projected the image horizontally between two separate devices, not on an embedded device such as on Federation starships, suggesting that holographic technology is at least involved in Cardassian viewscreen design. The Xindi used a similar device in the 22nd Century.
In the non-canon novel Demons of Air and Darkness, Starfleet uses an advanced version of this system to hold a meeting of numerous starship and station captains across the Federation. Each captain entered their own holodeck or holosuite, which then transmitted their own image to every other holodeck and received similar transmissions in turn, making everyone appear to be in the same room despite being across the Federation from each other.
In the non-canon novel Articles of the Federation, press briefings from the Office of President of the United Federation of Planets were conducted via holo-communications as of 2380. These briefings had formerly been conducted in person, but increased security during the Dominion War prevented this from continuing. From the point of view of the participant, they were in room full of reporters from all over the Federation without ever leaving their office, home, or even homeworld.