Many times the first thing most people think of when they think about disk quotas is using it to force users to keep their directories clean. While there are sites where this may be the case, it also helps to look at the problem of disk space usage from another perspective. What about applications that, for one reason or another, consume too much disk space? It is not unheard of for applications to fail in ways that cause them to consume all available disk space. In these cases, disk quotas can help limit the damage caused by such errant applications, forcing it to stop before no free space is left on the disk.
The hardest part of implementing and managing disk quotas revolves around the limits themselves. What should they be? A simplistic approach would be to divide the disk space by the number of users and/or groups using it, and use the resulting number as the per-user quota. For example, if the system has a 100GB disk drive and 20 users, each user should be given a disk quota of no more than 5GB. That way, each user would be guaranteed 5GB (although the disk would be 100% full at that point).
For those operating systems that support it, temporary quotas could be set somewhat higher -- say 7.5GB, with a permanent quota remaining at 5GB. This would have the benefit of allowing users to permanently consume no more than their percentage of the disk, but still permitting some flexibility when a user reaches (and exceeds) their limit. When using disk quotas in this manner, you are actually over-committing the available disk space. The temporary quota is 7.5GB. If all 20 users exceeded their permanent quota at the same time and attempted to approach their temporary quota, that 100GB disk would actually have to be 150GB to allow everyone to reach their temporary quota at the same time.
However, in practice not everyone exceeds their permanent quota at the same time, making some amount of overcommitment a reasonable approach. Of course, the selection of permanent and temporary quotas is up to the system administrator, as each site and user community is different.