The normal use is when outputting text to an [X]HTML document.
$text = "This text has some <special> characters & such that should not be treated as special HTML characters."
echo "<p>".htmlentities($text)."</p>\n";
Output would be something like:
<p>This text has some <special> characters & such that should not be treated as special HTML characters.</p>
PS: If you don't understand why: http://www.w3.org/TR/html4/charset.html#h-5.3