It would be like having an in game director/producer. For example in the case of static plots, cut scenes are triggered by events. So when the event is triggered current environmental variables and game state variables are taken into account for the cut scene. Lets says after u gain possesion of some item you trigger an event when u meet up with a particular character. The event doesn''t specify where or what time of day, so by making it dynamic you can make things look very dramatic by taking the unspecified variables of the event and giving an AI freedom to make creative use of them.
With shorter cut scenes it would be more for conveying things to the player. Like PHRICTION mentioned for an in game conversation system it would allow the game to point out little things. When a NPC''s facial expression goes against what they are saying or a quick expression of suprise when u bring up a particular topic. It could also give hints as to what the player is supposed to do or what can be used to help the player in advancing in the game.
I was also thinking you can also use a cutscene to pause the action so that your game can do some other processing. A brief 5 second cut scene could give a game to catch up on processing that gets backed up during normal game play. Lets say you want really good AI in your game but during some portions of the game the processor is busy doing physics, VSD... A quick cut scene would be the perfect way to catch up on processing the "high level thoughts" of a good AI.