The purpose of the interactive notebook is to enable students to be creative, independent thinkers and writers. Interactive notebooks are used for class notes as well as for other activities where the student will be asked to express his/her own ideas and process the information presented in class.
Sarah's guide to Interactive Math Notebooks -- her blog is excellent! She's done a great job of outlining everything you might want to know about how to use an ISN. Sarah teaches middle and high school math.