Patch bays are really useful once your studio grows beyond a certain point, or if you have limited gear that you must reconfigure a lot for different tasks. They are also nice if you hate "desk diving" as much as I do!!!
A patch bay is sort of like an old telephone switchboard- you use it to route signals back and forth. For instance, I have in my studio a Delta 1010
soundcard (8 analog ins/8 analog outs), 2 synths (that's 4 connections), a BBE Sonic Maximizer
(2 inputs, 2 outputs), my monitors (2 inputs), my stereo (2 inputs), a casette deck (2 outputs- I don't record with it), and my Digitech RP2000
guitar modeler (2 outputs).
That's 32 connections. I have a 48 point patch bay. Basically, I run all 32 of my connections permanantly to the back of the patchbay in it's rack. You use patch cables to hook things to each other, or to your mixer, in the front of the patchbay. That way you can reconfigure things as needed easily without any "desk diving"!!!