One of the situations when its used is when you are to be no. 2 to a traffic that was not yet cleared for an approach, and is on base or downwind leg. Let's say you're 12 miles out, 3k feet, cld to intercept the LOC, and there is other traffic on downwind at 2k feet, which is to be turned into shorter final "inside" you. Clearing you for LOC only, instead of ILS, means you have to stay at 3k feet until cleared for ILS, keeping you (and the controller) on the safe side if something goes wrong (delayed turn etc) - one of the a/c can be just revectored for another approach, no loss of separation.