The uses can vary drastically. From bodies with different skin layers or clothes, to meshes with different layers where you can apply a different effect like glow, full bright or even animations. And, since there aren't different mesh acting as a new layer (very common in some mesh avatars) there are no risk of alpha sorting problems.
I don't know yet if this will work for rigged meshes, but for now it works perfectly on static ones and I find it very useful for buildings.
I recommend to you to watch the video in HD.
Here you can download the example files.
Remember to read first the Creative Commons license:
http://creativecommons.org/licenses/by-nc-sa/3.0/
Files:
http://www.mediafire.com/download.php?gfumqzrodpnmlvz