It turns off the GPS receiver in your unit. Probably, you will never need it. But it can be used if you just want to look at the map indoors. It would prevent the unit from constantly searching for a signal where none is available. It is always disabled when you start up the Nuvi.
A better use would be for planning a visit (for example) to Chicago while you're in New York. You would turn on the simulator, zoom out, drag the map to Chicago and then zoom in. Then you could tap on the screen and set it as your simulated location.
Now you can create routes or search for local businesses and the Nuvi will behave the same as it would if you were actually in Chicago.
BTW, your question really has nothing to do with this forum which is intended for Garmin Connect troubleshooting on sports devices. For help with your Nuvi, you might want to visit a site such as the GPSReview Garmin forum here: http://forums.gpsreview.net/viewforum.php?f=2
