This effect allows you to delay sound for some amount of time to obtain sound effects like simple echo.
When delay amount is about 100 ms or more, it gives effect of reflections of sound (like echo), and when delay is some milliseconds, it gives effect of phase-shift (you can get pseudo-stereo effect – just delay sound in one channel by some milliseconds).
Delay is widely used for processing recorded voice or to get pseudo stereo effects (for the rhythm-guitar for example).