Bitcoin can be used to pay for things electronically if both parties are willing. In that sense, its like conventional dollars, euros, or yen, which are also traded digitally.
But is it differs from fiat digital currencies in several important ways?
Difference between currencies is that bitcoin has fixed supply which is really fixed and fiat - not, governments print as much as they wish and then again we have to pay for their debts while on bitcoin that's impossible.
To my mind this is difference between currencies but whole new wave of differences come when we look bitcoin as a payment method. Compared to traditional methods which are done by using fiat aren't anonymous while bitcoin offers cheap and secure transactions (of course finally it'a still not cheap because exchange fees).