IRR is the private markets equivalent of a money-weighted-return. It answers what annualised rate the invested capital earned, taking the timing of each call and distribution into account.
It can be flattered. Using a credit line to delay capital-call notices shortens the measured holding period and raises IRR without improving the actual result. Early realisations do the same. This is why multiples such as distributions-to-paid-in should always be read alongside it.
Technical caveats: IRR assumes interim distributions are reinvested at the IRR itself, which is rarely true, and cash-flow patterns that change sign more than once can produce multiple mathematical solutions. Public market equivalent comparisons address some of this by benchmarking the same cash flows against an index.
Related: money-weighted-return, distributions-to-paid-in, capital-call, j-curve, private-equity, time-weighted-return