Enabling single-application mode means that you can quickly and easily build a custom list of visible applications, and that list is dynamic. In other words, you can achieve a lot of what you might use Spaces for, without having to switch between spaces or manage which applications show in which spaces.

The main advantage to this single-application mode is that clicking an application in the Dock has always brought all that application's windows to the foreground. So, when I click Terminal's icon in the Dock, not only do all other applications immediately disappear from view, I see the window for my local shells, the window for the remote shells on my mail server, and the window for the remote shells on my primary DNS server. These windows are exactly where I want them on the screen and there are no other windows cluttering up the view.