This rocket (the Grasshopper RLV) is just a test article. It's a mass simulation of the first stage of a Falcon 9, which has been launched to orbit successfully 5 times in a row. The idea is to test and prove the re-usability concept on the Grasshopper RLV before adapting it to the first stage of the Falcon 9. They've only done small hops so far, but the plan is to continue launching the Grasshopper RLV with more and more fuel until it can replicate the trajectory of the Falcon 9's first stage and safely return, at which point they'd be ready to begin adapting the Falcon 9 first stage for a safe return and landing.
The key to economic space flight is full and rapid reusability. Payload launchers need to become as reusable as passenger aeroplanes for space flight to become routine.