I want to know in which circumstances such a template
  definition is useful.. Can somebody please provide an
  example where this has real practical use..?


I use it sometimes. suppose you have two elements in your source
<foo>xxx</foo> and <bar>xxx</bar>
and you want foo to generate the same output as bar except that
it has to be surrounded by <div class="foo"> ...</div>.

One way is to have

<xsl:template match="bar" name="bar">
 <span><xsl:apply-templates/></span>
</xsl:template>

<xsl:template match="foo">
 <div class="foo"><xsl:call-template name="bar"/></div>
</xsl:template>

Of course, there are other ways to achieve this, but still this idiom
comes in handy sometimes.

David


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