The primary uses of Custom DNS are going to be:
- You have your email hosted elsewhere and would like to continue using it (this is probably 90% or more of what it's going to be used for). You would use an MX record in tandem with an A or a CNAME record to do this. Google Mail for Domains is also likely to be what most people will want to use because it's free.
- You use another blogging or publishing service in addition to your WordPress.com blog that supports mapping to a subdomain and want to create records for that. These would be either A or CNAME records. Instructions on how to do this would be provided by any service provider that supports the feature (just like we do).
The important thing to note is that any time this is available to you, the provider you're using for the other service will have all the information you need to enter into the DNS record form. What we'd been saying "no" to before now was almost (if not) entirely people who were moving to WordPress.com from GoDaddy or similar hosting who wanted to retain their existing email services. Not only can people do that now, they can even set it up themselves.
Something you couldn't do before: we used to have one-touch setup for Google Mail for Domains, where we would create the MX records for you. This wouldn't support their "custom domains" feature, because we didn't have MX enabled. Now, you can add this record:
CNAME mail ghs.google.com.
…and you would then be able to reach your Google mail by going to mail.yourdomain.com. (After you also configure the link on the Google Apps side of things.)