Traditionally steeking is used in fair isle/stranded colour work sweaters like Norwegian ski sweaters. You knit the garment in the round and then cut holes for the sleeves. You can also knit a sweater and cut all the way down the front to turn it into a cardigan.
Why do you need to knit fair isle in the round? Because it's much easier. I find knitting fair isle on purl rows really fiddly and I prefer to work in the round when I knit fair isle garments.
When I design garments worked in the round, whether they're fair isle or not, I have to make decisions about how to handle armholes/sleeves and the yoke. My options are basically working a circular yoke, a raglan yoke, splitting the sweater at the underarm and knitting front and back flat separately or knitting the sweater as a tube to the shoulders and then cutting the holes for the sleeves.
Although cutting holes for sleeves and cutting down the front of a sweater to turn it into a cardigan are mainly used for fair isle sweaters, there's no reason you can't use it for other types of stitch patterns too.
For example, if you knitted a stocking stitch sweater but you decide you prefer cardigans, cut down the front of the sweater, add button bands and you've got a cardigan.
It can also be used to make corrections to a garment, like cutting off excess fabric. Here's how I used it to correct a cardigan for a friend.
Intrigued by steeking? Fancy learning more? I'm teaching Steeking in Liskeard on Wednesday 7 October. Get the details and book here.
I'm also teaching a full day combined fair isle and steeking at the Artesano Academy in Berkshire in February 2016. Get more details and book here. I'm teaching a series of classes at the Artesano Academy next year.