It explains what is in focus for a given aperture. So, using the lens above:
At f2.8 (or a really wide aperture), you are limited to things which are basically at 1.5m. That means anything away from 1.5m will appear blurred (or have the bokeh effect)
At f11, anything from about 1.3m to 2m will be in focus, and everything else will be blurred
At f22, it extends to a range of 1.1m to 2.7m.
Not all lenses have this, but it can be useful for portraits and still life to work out what you want in focus.
It's also an exponential scale, in that the area behind the focus point extends quicker than the area in front as you go for a more narrow aperture.
It can also help a bit for landscapes as a friend of mine once explained to me - the natural tendency when taking a landscape is to use auto focus and put the focus out to infinity. However, if you use something like f16 and manually focus on something a little closer, the depth of field range I've described above will include infinity. Hey presto - you've just made an area a bit closer to you a bit more in focus without losing anything in the distance.
