What it does is allow you to display post titles for a single category in your sidebar.

The use for this is that you can have a "News" section and have just the posts for the category "News".

You can also use it multiple times for multiple categories (news, projects, resources, etc).

Here is the link - http://watershedstudio.com/portfolio/software/wp-category-posts.html

WordPress is great as a CMS.