It is well suited to portable devices such as laptop computers and thumb drives which are particularly susceptible to being lost or stolen.
If used properly, someone finding a lost device cannot penetrate actual data, or even know what files might be present.
Thereafter, in order to access the disk's data, the user must supply the password to make the key available to the software.
Done in software, encryption typically operates at a level between all applications and most system programs and the low-level device drivers by "transparently" (from a user's point of view) encrypting data after it is produced by a program but before it is physically written to the disk.
Some disk encryption systems, such as VeraCrypt, CipherShed (active open source forks of the discontinued TrueCrypt project), BestCrypt (proprietary trialware), offer levels of plausible deniability, which might be useful if a user is compelled to reveal the password of an encrypted volume.
The hidden volume will not be compromised, if the user takes certain precautions in overwriting the free areas of the "host" disk.
[3] This means that it is impossible to prove that any file or partition is an encrypted volume (rather than random data) without having the password to mount it.
Portable or "traveller mode" means the encryption software can be run without installation to the system hard drive.