Yeah, its great for template based things. You can essentially make up your own custom HTML tags which get replaced with whatever you want them to.
For instance, maybe you're in the VERY GOOD HABIT of seperating PHP from HTML, and your HTML guys knows NOTHING about PHP.
Instead of him having to learn PHP and learn to do:
<?php print ($myvarname); ?>
Just tell him to put this wherever he wants that variable:
<TEMPLATE:First_Name>
Obviously the second is lots more freindly to someone who JUST knows HTML.
Other things too, sometimes you want to be able to use header() ( wwww.php.net/header ) but have HTML before that call. ob_start() before anything, you can put header() calls anywhere you want.