What's an exampe of a time you'd use a mask on Photoshop?

If I want to limit an effect to a certain shape or portion of the page, I would usually use a mask.

In the design for Fluther, I would use a mask to fade the opacity of the dark background pattern as it moves towards the bottom. The same is probably used for Mr. J’s ‘shiny’ effect up top in the header.

Used another way, if I wanted to add a hand drawn highlight to the ‘Question’ bar, I would mask that in my mockup so it would appear only in that portion and not on the layers behind.

Does that help?

Masking is a great way of controlling many things in Photoshop. In most situation, I will use a mask to only show a small portion of some large, destructive edit.
For example:
Let’s say I have a photo of a flower, with a large, blown out, over exposed area on one of the leafs. Let’s also say I was smart enough to shoot in RAW. In this example, I could take the photo, and open it twice, once normally, and then, in the other photo, fix the over-exposer. However in doing so, I would destroy much of the rest of the photo. I would copy the second photo over the first, then mask off all but the fixed, over-exposed area.

Masking also allows, as funkdaddy said, for smooth gradients and feathered blending in photos.
One final thing I would note: Masking can be a quick way to “cut-out” a background in an image. For example: If you have a model standing in a field, and you wish to remove the field and add a background of a city, you could easy mask out the background of fields by hand.