In my example, I used the fleur-de-lis shape in fill pixels mode to cut out a section of the wood texture layer in one step. To do this without the clear blending mode, you would have to draw the shape, convert it to a selection, and then delete the selected area, so the clear blend mode can save you steps, and help you erase pixels in way you might not have thought of.
The Clear blending mode will be unavailable for a background layer, or if preserve transparency is enabled on the target layer.

