Your Mac keeps detailed records of your activities on the web, and anyone else who looked at the right files could determine a great deal about how and where you've been spending your time. To state the obvious, this means (among other things) that your spouse could tell that you've been viewing porn or looking for a fling, your employer could tell that you've been goofing off on the job, and law enforcement agencies could tell that you've been downloading pirated software. Not that you'd ever do such things, of course!
But it's not just people who engage in questionable activities on the web who might want to cover their browsing tracks. Suppose someone stole your computer. Would you want the thief to know all the websites you visited in the past month — however innocent they may be? Or imagine you're a journalist researching terrorist organizations. Would you worry that a government investigator could draw the wrong conclusions about you by looking at your browsing history? Or maybe you simply want to keep details about gift shopping, trip planning, or other surprise activities secret from an inquisitive family member.
You may have any number of reasons to keep other people from learning about your browsing activities, however legal and ethical they may be. Whatever the case, you should know what information your Mac typically stores as you browse the web and how to protect the privacy of that data if you feel it's important to do so.