I had never heard of recycling coffee grounds as fertilizer on plants, but my mother in law does it and swears by it.  Coffee grounds are an excellent source of nitrogen and make a great fertilizer for many plants. You can either compost them first, or put them directly onto your plants, as my mother in law does.

Will It Damage My Plants?
Adding too much will cause impaction issues and can lead to mold and fungus growth on your plants.  Make sure you sprinkle a little at a time and give that a chance to break down before adding more.  You can use it on both indoor and outdoor plants, just make sure there is a thin layer so it doesn't clump up and prohibit air from getting to your plants.

Composting Coffee Grounds
Coffee grounds are an awesome addition to a compost pile, and the filter will break down quickly.  When composting, you want a good mix of brown and green items.  Brown items are dried leaves, cardboard and other "dead" things.  Coffee grounds, grass clippings and plant prunings are all green items.  Use coffee grounds to improve the nitrogen content of your compost.

You can also sprinkle coffee grounds directly onto your grass.  Lawns are greedy about nitrogen, so if you cannot get rid of your coffee grounds fast enough on plants, sprinkle the excess all over the yard for a greener lawn.

Make a liquid fertilizer by combining half a pound of grounds with 5 gallons of water and pouring it on your plants.  Coffee grounds are a versatile fertilizer and better yet, they're free!