Further to my question asked here: prior post
and which left some points unanswered, I have reformulated the question as follows:
What is Ito's lemma used for in quantitative finance? and when is it applicable?
I don't understand for instance if Ito's lemma is used for obtaining a SDE from a stochastic process or the converse: obtain a stochastic process from an SDE.
Furthermore vonjd's reply is a bit confuse to me: does he mean "Ito's lemma can
be used for processes with bounded quadratic variation?