Like most user/admin-populated AD attributes, it's used for whatever the heck you want to use it for. Generally, that would be for the physical location of the object, as Chris McKeown points out, but you could use it for anything you wanted, and there might be some value in doing so if you're a small company with everything in the same physical location, given that, by default,
Location is displayed more prominently than
CustomAttribute8 and the like .
I saw an AD environment a little bit ago where the sysadmin used it to somewhat subtly insult the users with locations like
in the clouds,
lost in shipping,
lodged in Cologne, and so on (think
user's head is...), so the possible uses really are only limited by your creativity (and perhaps, level of malice).