This is similar to what Google does to determine location via Wi-Fi. However, RIM's Locate Service use cellular towers instead of wireless hotspots. As more and more applications become geo-aware, having backup methods for location querying is important, especially if the app is being used in a location or building that makes GPS usage difficult.
The BlackBerry Developer's Blog details how the geolocation service works and gives some examples of how it can best be utilized. The service can even be used in apps that require a higher degree of location accuracy by showing users approximate locations while querying for a more accurate spot via GPS. As the blog post notes, this could have a huge impact on speed and user experience.
The Locate Service can be used with BlackBerry Maps to tie in points of interest with the Maps app, or to show a map display as it relates to a user's location. Again, while other mapping APIs have offered some similar functions, what is interesting about this approach is that it is a native part of the BlackBerry developer API. That makes implementing it into apps less complicated and independent of a third-party service.