CNAME records

A CNAME record or Canonical Name record is a type of resource record in the Domain Name System (DNS) that specifies that the domain name is an alias of another, canonical domain name. This helps when running multiple services (like an FTP server and a webserver; each running on different ports) from a single IP address. Each service can then have its own entry in DNS (like ftp.example.com. and www .example.com.). Network administrators also use CNAMEs when running multiple HTTP servers on the same port, with different names, on the same physical host.
CNAME record - Wikipedia, the free encyclopedia

What does creating a CNAME record for your domain do? When do you know it's time to create one of these records for yourself?