By adding business units, this enables the company to segment purchase orders per department, create authorisation levels consistent with that department, and run reports per department.

Service-orientated companies would typically have business units called: sales, marketing, finance, human resources, etc. Manufacturing companies would have raw materials, production, overhead, personnel, etc.
If you are a small business, with no separately identifiable business units, consider using this function to segment various types of large expenditure, eg. Travel, office consumables, stationery, IT, etc.