I use it to manage different instances (eg dev, test, production) of the same site so that each instances unique settings.php stuff can be version controlled along with the other instances in the same codebase. That way I can check out the codebase onto any of our servers or virtual hosts and it will pick up the appropriate database connection and other settings.
Ok - this sounds vastly interesting to me. I would love to hear a more detailed explanation of how this might be set up. Can you upgrade a module on dev first and then port it to stage/prod? Can you use subdomains for this (mysite.com and www.mysite.com, dev.mysite.com, stage.mysite.com)? Is there a tutorial on drupal.org or would you be willing to provide more detailed information as to how you accomplish this?
I am currently running my dev environment on a completely separate server and that worked for this smaller project but I am about to embark on some bigger projects and this sounds like it will be the way to go.
.s