The central carbon in the leuco form is in a tetraedric configuration, forming four covalent bonds. In acidic environment the lactone ring is broken, the central carbon loses one valence and becomes a resonance stablized carbocation (although it might be better to draw the resonance structure with the cation on nitrogen), this planar carbon interconnecting the π systems of the aromatic rings and the amino functional groups to form one large conjugated system acting as a chromophore with strong absorption in visible spectrum, giving this compound its distinctive color.
It was the first dye used in carbonless copy papers, and it is still widely used in this application. It is also the leuco dye component in some thermochromic dyes, eg. in the Hypercolor line of clothing. One of its novel uses is a security marker for fuels.
It may cause allergic contact dermatitis in people handling the carbonless copy paper.