Along with collection management, it can also be used for personal databases, such as cataloging bills that have serial numbers & warranty information.
When creating a custom collection, it is useful to keep it unnamed. This way all the custom field definitions (text, list, numbers etc.) get embedded inside the .gcs XML file. Hence, the schema and the data will be stored at one place creating a self-contained XML file.
The great thing is that this XML file is simple to understand and so it can be edited easily with any text editor. This comes in handy when you want to change say all the file paths of attachments.