This new feature is a much anticipated and most urged one. There are scenarios in D365 implementation where we need to reference multiple entities to a single lookup, but with the current setup we need to create multiple lookup to achieve it. This feature will help eliminate those creation of additional fields and logic.
The real life scenario would be like I have a different vital business entities like Entity A, Entity B and Entity C and also got intermediate Entity D which is 1:1 relationship with all the three vital entity. In this case, with the current setup we will create three lookup to the Entity D and reference those three entities. The new feature will eliminate these unnecessary creation of two addition lookup and able to achieve using single lookup. The classic example for this type of lookup is the customer (contact/account), user (users/teams) lookups.