For what purpose do they want this information?
The most common purpose is timing. If you are involved in another process, they need to make their offer ASAP. That means, for instance, that they could try to schedule your interviews ASAP, instead of 'whenever'. My company always asks this during recruitment process. The "classic" process is 3 interviews, one per week, plus one week to confirm the terms - about 1 month. However, if people have a strong timing constrait (example : I have already received an offer from Company X, and they want an answer in the next 10 days, you are my first choice and they are my second) the process can be sped to meet the applicant's deadline.
Is this an area that I should be open and truthful about ?
Yes, as long as you do not offend the recruiter, and as long as there is some kind of coherence. A dev interviewed at Google saying "I'm also in process with Apple and Microsoft for similar jobs" is fine. The same guy saying "I'm in process at Apple and Microsoft, and they are my 1st and 2nd choice" is taking a big risk. The same guy saying "I'm also in process as a bank trader at XYZ and a sales rep at ABC" might raise coherence interrogations - why is he motivated by this job if he applies in very different fields ? Ask yourself, what would the effect of your answer be on a recruiter.