It's used to co a small number of sts for the start of a circular knit piece and to prevent any hole in the middle. What I do is generally CO with Long tail or maybe knit, put the sts on 2 dpns ,then use a 3rd to knit with until there's more rows and sts to work with and add the other needles and rearrange the sts. Or I use one circ with the cord pulled out halfway and the stitches just on the ends and use another circ to knit them with. If you have a hole, it's small and the tail can be used to close it up.
Other good COs for circular knitting are the Turkish/eastern CO, figure 8 and the Magic CO.
sue- knitting heretic