Some "boss" mobs in general and a lot of mobs in raids are immune to their own spell, but reflecting it means you don't suffer its effects, such as Fel Fireball against Lord Jaraxxus in Trial of the Crusader.
On heroic and normal instances it's sometimes very useful ability to tank casters. For example, one could activate Spell Reflection to deflect an incoming spell. This not only helps reduce damage taken, but also generates threat.
Something less known about Spell Reflection is its ability to reflect multiple spells if they are both cast while the buff is still active (i.e. leave the caster's hand). This makes it very useful when coupled with a charge, as it allows the warrior to reflect the initial spell from each casting mob simultaneously if their casts have the same length and start at the same time.
As of Patch 2.1, reflected spells generates threat as if the damage were dealt by a normal attack. Also, this threat is subject to the usual threat multipliers granted by Defensive Stance and/or Defiance. This change was not officially noted, but it has been confirmed by several players.