The machinegun is quite self-explanatory. It shoots bullets at a high rate of fire, and can do significant damage. The primary fire mode has a high spread and is thus quite inaccurate - but it fires very fast and deals more damage per second than most other weapons. It is therefore devastating when used at close quarters. One of the machinegun's unique features is that the first bullet after pressing fire have less spread and does more damage than the rest - keep this in mind when using it. The secondary fire mode is much slower, but its the same as the primary modes first bullets. This firemode is therefore very useful as an improvised sniper weapon for mid range kills. Like the shotgun, it is an excellent finishing weapon, but its effective use relies heavily on a good, steady aim. The machinegun uses bullet ammo just as the camping rifle.

It's... a machinegun. Try not to think too hard about it.
The primary firemode has a very high rate of fire at the expense of accuracy.
The secondary firemode has excellent accuracy at the expense of the rate of fire.
The machinegun tends to be an underrated weapon, but it's surprisingly dangerous in the hands of a skilled player. It's actually one of the most versatile weapons in Nexuiz due to its usefulness at close and long range. At very close range, the primary firemode is surprisingly dangerous.
At long range, or even very long range, the secondary firemode allows the MG to be used as a makeshift sniper rifle. Don't forget that “zoom” can be used with any weapon, and that there are scripts availible to allow variable zoom, zoom greater than default, etc. In combination with the zoom, the MG has the second longest effective range after the Nex.
If a player has poor aim, a poor framerate, a poor connection, or any combination thereof, the MG secondary can be more useful than the Nex due to the higher rate of fire.
A favorite use of the MG is to take out a weakened player, particularly after a Nex shot or rocket blast.