A great link at Everyday Food Storage that talks about the different kinds: Instant, Non-Instant, and Milk Alternate. Here's a link to an awesome conversion chart she made as well.
Instant milk powder is just non-Instant with air whipped into it, meaning you have to use twice as much volume (same weight) of it to get the same amount of milk. To me, this means store the non-instant, so it doesn't take up as much space. (Even if it does mean non-instant takes more mixing to get it to dissolve.) Non-instant is usually cheaper as well.
Milk alternate isn't really milk. It's not as nutritious. I, unfortunately, didn't realize some companies sell something that is not really milk and so I bought a few #10 cans when it was on sale, not reading the label closely. boo. So I'm stuck trying to use it up, but at least now I'm wiser for it.
Powdered milk will last 20 years in storage and is most often found in fat free varieties.
Powdered Milk is Great for:
Thickening homemade yogurt (and I've heard you can make yogurt with it. I mean to try)
Rolls (recipe soon. sooooo good!)
Really anything baked that calls for milk! (muffins, cakes, breads, etc)
White sauces- Everyday Food Storage even has something called Magic Mix, that I haven't tried yet, because you have to store it in your fridge, (it contains butter) but it makes white sauces quick and easy.
Creamy Soups- I've got at least one recipe to share.
Making your own pre-made mixes: muffins, cornbread, pancakes, cake, etc.
Make your own sweetened condensed milk (I haven't tried this yet)
Make your own evaporated milk- don't you hate it when the recipe doesn't use a full can? Well, now you can make the amount you need!
Make your own buttermilk for a recipe.*
Protein supplement in a smoothie or shake!
I know a lot of people drink this straight up, but that's a bit much for me. I probably wouldn't even put in on cereal, unless it was an emergency, because I'm snobby like that. I would have tried it, just to let you know my thoughts, but since I'm off dairy now, (for baby Hazel) my recent experimentation will be limited.
Where can you get it?
If you live in Utah, a lot of local grocery stores, like Macey's, carries a lot of Emergency Preparedness items. The cheapest place (works out to $1.46 per gallon of milk), however, is an LDS Cannery (they only sell the non-instant), but they, unfortunately, don't sell powdered milk online because you have to go and put it in cans yourself, and they're not as convenient to get to if you live, say, back East. You can find a location nearest you here.
So for the rest of you:
Shelf Reliance (They only have instant. Works out to $5.70/gallon of milk)
Emergency Essentials (They only have instant. Works out to about $4/gallon of milk)
even Amazon.com (Many to choose from. There is one brand of non-instant but it's PRICEY- about $10/gallon of milk! Yikes!)
Are you sick of this yet?
*note: I have powdered buttermilk that I use regularly too, but I may stop storing it to take up less space, since you can make it with the powdered milk.