When would this be useful? If your site has a blog with public commenting turned on, links within those comments could pass your reputation to pages that you may not be comfortable vouching for. Blog comment areas on pages are highly susceptible to comment spam. Nofollowing these user-added links ensures that you're not giving your page's hard-earned reputation to a spammy site.
A search engine considers the content of the sites to determine the QUALITY of a link. When inbound links to your site come from other sites, and those sites have content related to your site, these inbound links are considered more relevant to your site. If inbound links are found on sites with unrelated content, they are considered less relevant. The higher the relevance of inbound links, the greater their quality.