I believe the fullscreen mode, as implemented in Mountain Lion, was largely intended to be used on Apple laptops with smaller displays.

The first time I used the feature on a Macbook Air without an external display I suddenly 'got' it. It made a lot more sense.

(That said, at least Mavericks doesn't make it unusable on a multi-display setup.)

Edit: Incorrectly thought fullscreen mode was introduced in Lion