What are typical use of using different 'network locations' Usually I'm just using the "Automatic" location in System preferences->Network with my home and work wifi networks configured.

I was wondering what would be the advantage to configure different locations ... What is it useful for ?
If you have a different network setup somewhere, that's the obvious reason to use locations.  For instance:

I use a public DNS provider (like GoogleDNS or OpenDNS).  That means I don't use the DNS server on the local network.  However, when I go into a public WiFi location (a coffee-shop, hotel, etc) this can cause problems.  The issue is that the authorization step to get onto the local WiFi network requires that my browser go to some page.  And to get to that page, I have to use DNS to figure out the IP address.  But, my request to Google's DNS server isn't allowed, since I'm not yet part of the network.

So, I set up a network location called "CoffeeShop" which doesn't specify a DNS server.  I renamed my "automatic" location to be "GoogleDNS".  Now, when I'm at Panera's and want to use their public WiFi, I switch location to "CoffeeShop" and then my DNS query during authorization goes to the local DNS server.  Note that you can quickly switch location under the apple menu (this only shows up if you have more than one location specified).

Enjoy!