It’s used in different ways. One is to add additional geometry. Another is to avoid shading artifacts during rendering. For example the top and bottom of a cylinder which is by default an N-gon are difficult to bevel. So you can inset the N-gon face to have quads around the edge so that you can bevel that edge. Off course you could do it manually by deleting the face and then extrude the edge, escape out of the move and scale inwards then fill the empty space with a face again. As you can see insetting is faster and easier.
