I noticed this whilst browsing the SQL Server 2005 online help. It creates a permanent (until you DROP SYNONYM) alias to an object in SQL Server. This could be very useful in shortening the amount SQL you need to type. Imagine you have a remote database containing a schema and table. You can either:

SELECT * FROM REMOTE_SERVER.SCHMEA_NAME.THE_TABLE_IN_QUESTION

Or:

CREATE SYNONYM THE_TABLE
    FOR REMOTE_SERVER.SCHMEA_NAME.THE_TABLE_IN_QUESTION
GO
SELECT * FROM THE_TABLE

Useful? Yes, but even more so when you need to use a database that has daft object naming conventions like Remedy managed systems.

CREATE SYNONYM Customers
    FOR dbo.C0183
GO
SELECT * FROM Customers