It is when you create 2 Forms, one with say a panel on it, then make the other form's parent property the panel on the first form.
for example:
Function in Form1
if Assigned(Form2) then
begin
Form2.Parent := Panel1; //this is a panel on Form1
Form2.BorderStyle := bsNone;
Form2.Align := alClient;
Form2.WindowState := wsmaximized;
Form2.Visible := true;
end;
I use it heavy as you can create a single form with some functionality and then place it in various places in your program. It also segments the functionality into discrete (manageable) units that manage not only the functionality but also the visuals.
Ciao