Disclaimer: I have no idea how BIS will implement these feats in the actual game, and I'm not sure if Improved TWF is in. This is just an explanation of how TWF works in 3E and an analysis of when it's useful.

Dualwielding
In 3rd edition, if you have a BAB of +X, you get attacks at +X, +(X-5), +(X-10), etc. So if you have +7, you get attacks at +7/+2, and if you have +16, you get +16/+11/+6/+1. (This doesn't apply to monks fighting bare-handed; they get attacks every +4 BAB instead of +5.)

Anyway, there are a number of ways to get additional attacks. For monks, using the "flurry of blows" gives an extra attack at the highest BAB, but -2 to all attacks. For ranged weapons that reload quickly (rifles, bows, etc.) the "rapid shot" feat does exactly the same thing.

For melee weapons, things are a little different.

No matter what you're wielding, and how bad your penalties are, you still get all your attacks with a weapon in your main hand, and at least one attack per round with a weapon in your off-hand (if you have one). This is important to remember--as soon as you pick up a weapon in your off-hand, you immediately get one extra attack.

What are the penalties?
Well, just as the monk and the archer get a -2 penalty on all attacks in exchange for the extra attack, right off the bat you're gonna get that -2 penalty in exchange for the extra attack. There's just no way to get rid of it, just like there's no way to get rid of the monk's penalty for his flurry of blows (otherwise there'd be no reason not to use it every round).

You get a -4 penalty if you use anything in your off-hand if you don't have Ambidexterity. This is the -4 penalty that is applied in 3E to anything that you aren't proficient with. For instance, if you are a wizard with no extra weapon proficiencies, and you pick up a halberd, you will get -4 to attack because you're not proficient with it. Taking Ambidexterity makes you "proficient" with your off-hand, so you don't suffer the penalty.

The third penalty is also a proficiency penalty. If you don't have Two-Weapon Fighting, you're not proficient in fighting with two weapons, and you get another -2 to all attacks. If you have it, you don't get the penalty.

The last penalty is up to you. If you want to use a big, honking weapon, like a battle axe or a longsword, in your off-hand, you get an extra -2 to all attacks. If you use a light weapon, like a dagger or shortsword, you don't. Most people who don't want to play Drizzt clones will take a light off-hand weapon.

Feats
There are feats that improve on TWF as well. Most require both Ambidex and TWF already be taken, as well as a high BAB:

Improved Two-Weapon Fighting does not decrease your penalties or anything of that kind. What it does do is give you an extra attack with your off-hand, at -5. This is huge, of course, because a fighter can get six attacks by 20th level.

Off-Hand Parry is another feat that requires Ambidexterity and Two-Weapon Fighting as prerequisites. It allows you to not take your off-hand attack in a round in exchange for a bonus to AC. This feat is in Sword and Fist.

Twin-Sword Style, from the Forgotten Realms Campaign Setting, allows you to get a +2 Dodge bonus to AC against a single opponent, as long as you retain your Dex bonus to AC (you are not caught flat-footed or helpless) and you are wielding two bladed weapons (such as daggers, swords, rapiers, etc.). You do not need to sacrifice your off-hand attack to get this bonus.

From Masters of the Wild, Greater Two-Weapon Fighting requires Improved TWF and allows an additional attack at -10. If anything, this feat is probably underpowered, considering the number of prerequisites, and the fact that the added attack is at a significant BAB penalty. Adding Improved Critical, Weapon Focus, or Weapon Specialization is likely to get you a lot more bang for the buck.

The Math
So, let's recap. First, assume that the character is a 16th-level fighter, and is wielding one longsword and one dagger:

With no feats, he gets -4/-8. He attacks at +12/+7/+2/-3 and +8 off-hand.

With Ambidexterity only, he gets -4/-4, and attacks at +12/+7/+2/-3 and +12 off-hand.

With only TWF, he gets -2/-6, and attacks at +14/+9/+4/-1 and off-hand at +10.

With both feats, he gets -2/-2, and attacks at the impressive +14/+9/+4/-1 and off-hand at +14.

With Improved TWF, he gets attakcs at +14/+9/+4/-1, and off-hand at +14/+9.

With Greater TWF, he gets attakcs at +14/+9/+4/-1, and off-hand at +14/+9/+4.

So in other words, the fighter spends a few feats and gets to attack a number of extra times, at a high attack bonus. If the fighter is trying to bring down one big enemy with a high AC, then maybe different feats might have been more useful (though he is probably still better off with the two attacks at +14 than one at +16). But if he's fighting a horde of weaker enemies, or a single enemy with a low AC, then the extra attacks and damage he does are going to be huge!

Things are also good for rogues, who get sneak attack damage on all their attacks. Rogues are ideal candidates for taking TWF feats because of this, and because they already have the high dexterity they need to take Ambidexterity in the first place. Note: in IWD2, rogues may only get one sneak attack per round, pending the designers' decisions on game balance.

Remember also that a human at first level can take both Ambi and TWF, giving them an extra attack right off the bat, so the feats are definitely not wasted.

Alternatives to Two-Weapon Fighting
Two-weapon fighting isn't for everyone. If it's not your character's style, or he/she doesn't have the huge 15+ Dex needed to take Ambidexterity (which makes off-hand attacks effective and is a prerequisite for most of the other TWF feats), then there are a lot of other great options.

For the intelligent character, you can take Expertise, and later Improved Trip, Improved Disarm, etc. For the strong character, you can take Power Attack, Cleave, Sunder, and Great Cleave. For the quick character (but maybe not quick enough for Ambidex), you can take Mobility and Dodge, leading up to the formidable Whirlwind Attack.

Characters can massively improve their melee damage output by taking Weapon Focus, Weapon Specialization (fighters only), and Improved Critical. For ranged damage, there are a host of feats, including Point Blank Shot, Rapid Shot, Precise Shot, etc.

Out of Sword and Fist there are a number of other fun feats, like Monkey Grip, which lets you use a large weapon in one hand for a little extra damage, or Throw Anything, which lets you, well, throw anything at your foes for nifty damage. There are a lot of other combat feats there, too.

Conclusion
There are a lot of different fighting styles that you can customize your combat-oriented character with in 3E. TWF is just one of these.

TWF isn't nearly as overpowered as it was in 2E, but it's very good for some characters. At the very least, it gives you some interesting combat options, and lets you use one more nifty weapon rather than selling it. I'm sure to be using at least one dual-wielding character in IWD2, though probably not more than one.