I'll be curious to see what other things get mentioned! Here are a couple of reasons for multiple tracks:
1) Text: You can overlay text on top of your video. When you select a transparent background for the the text then the lower track "shows through". If you want to have multiple different styles and locations for text, not to mention text that moves and/or fades in/out independently of the other text, then you'll quickly want even more than 3 video tracks!
2) Transparency effects: Put your mouse over the very top of a video track and notice how the cursor turns into a hand. Left-click then lower the hand. The video track now has some transparency, letting the track below it blend in.
3) Chroma key effect: This is similar to #2 above, but in this case yoiu specify which color will become transparent within the upper track, allowing the lower track to show through. The prototypical use of this is to film someone on a "green screen" and then later add background scenery.
4) Multi-camera editing: If you record a single event using multiple cameras, you can overlay video from each of the cameras on separate tracks, then splice out the camera angles you don't want for any particular segment.
And to gogiants excellent examples, I might also add picture-in-picture and the Brady Bunch effect, in which you crop down your video to only a portion of the screen and show several squares of live video at once.
Another use is to keep the soundtrack and parts of a longer videoclip while superimposing stills and other videos (omitting their soundtracks) on it.
I had a long video sequence from a christening showing mother and child while the organ played. I wanted to clip-in some stills and small videos of what the the brothers and sisters were doing during this time - if I had only one track, I should have clipped parts out of the video and added the other stills and videos in their places - here in MS I just put them in the video track above and got the desired result and - must urgent - kept the soundtrack with the organ playing from the long videoclip. Of course the stills and videoclips of the other brothers and sisters were taken before and later but in the final result nobody could notice this.