Neo4j was created to provide a better way to work with data by focusing on relationships rather than just storing and retrieving data. The first version of Neo4j was developed by Emil, who wanted to find a better approach than the hierarchical model he used in his previous experience. Neo4j's purpose is to simplify the understanding of structured data and enable fast traversals. The best practices for using Neo4j include using a rich data model, Cypher carefully, avoiding Cartesian products, large result sets that build up memory, and checking indexes and labels. It's also important to use separate queries, tune server configuration, get a cluster running, pick an awesome driver, and have a relationship with the Neo4j team. By following these tips, developers can effectively work with data using graph databases like Neo4j.