This is very useful for forced-widescreen games like Zelda and Xenoblade. You get 120 more lines of resolution when the Wii is set to 16:9. Should be pretty useful for DVD movies too.
Zelda "normal"

Zelda with "underscan" on

Also useful to stretch low-res arcade ports that are squished horizontally (Ghosts and Goblins on Wii, Gradius on Saturn), because the original resolution is different from the console's output resolution.
GnG Wii "normal"

GnG Wii with "overscan"
