Sometimes people are working in a program and want to save their file in a different format than the default format. For instance you could be using Works (which is included on many new computers) or OpenOffice (which is a full featured office program from Sun/Oracle) and want to save the file for others to use in Word. In this case you want the file to be a .doc format file. In other cases working with pictures you may want to save the picture as a .tif (not compressed) format instead of the default .jpg (compressed format which loses quality with opening and saving).
It is not just a case of type the file name with the extension you want. Doing this still leaves the file in the original format and becomes more difficult to open as the machine (or person you sent it to) looks at the extension and assumes it is in a different format than it really is and tries to open with the wrong program. This is fixable by changing the extension me on the file which does not require opening.
To save the file in another format look in your Save As box and it will have a line at bottom labeled Save As Type. By changing here you are telling the program to convert the file contents to the different format and the extension will be changed for you in the Name box. Then when you go to open the file it will open in the correct program.
This is useful in OpenOffice (a free office program from Sun/Oracle) as it saves in its own format by default. Also if you have gotten pictures in a different format opening them in a photo editing program and using the save as option you can save them in JPG or PNG format that browsers recognize. For instance I shoot my pictures in Raw format which is uncompressed and then I edit and save them in Photoshop and I change the extension/format to JPG when I save them and then I can put them on photo sharing sites and on web pages. I keep them in Raw also so I can still go back to the original as I shot it.