what is Locations used for in Finder

It's used for....locations - shares on your network and your own Mac's drive at the top level.

1Pink Lady wrote:

I am sorry, this doesn't mean anything to me. I was deleting files and for some reason they appeared in "Locations" and on my desk top. Once I deleted those files out of "Locations", the category went away.

I am trying to understand what this category is used for or how & why I would/should use it.

You can see more from Finder>Preferences>Sidebar

Get to know the Finder on your Mac

https://support.apple.com/en-us/HT201732