The Frequent Locations setting explains itself quite vaguely:
I see the service polling my current location often* but I don't see any concrete benefits having this option turned on. In another question it seems it can give you a daily estimate / driving instructions to your workplace (or similar daily-visited location) via the notification centre—is that all?
*) the location services icon briefly toggles in the status bar and no other app has the violet icon in settings
Best Answer
According to the 8th part in this list on mashable.com, the frequent locations setting can help your iphone collect information on where you have been most often, and then provide you with a map of those locations.
The information can be used to offer better predictive ideas of how long it will take to get from your current location to calendar events' locations.
The information could be used for anything else, however.
UPDATE:
I recently discovered that the iphone uses the location, time and day information to enable it to "guess" how long it will take for you to go from your current location to a location you normally go to at this time on this day.
Caution the next part is speculation I would wager that this is Apple's answer to Google Now, and the functionality is roughly the same. E.g. It's monday morning, I'm at Location A, I go to work in Location B, my iPhone can now tell me that because it's X o'Clock, and I'm at Location A, it will take 30 minutes to commute to Location B.
I still can't see any benefit of using the frequent location data for any other reason, other than to link with maps and calendar events.