SQLDOM is useful in three main categories:
Sometimes a data-centric, server-side approach to HTML creation, manipulation and consumption is appropriate.
Poplular Javascript libraries like JQuery and YUI suport "set-based" manipulation of HTML via selectors. This is done primarily in a client-side browser.
Of late, server-side javascript (SSJS) has become popular with projects like Node.js, Ringo and others. See: http://zope.cetis.ac.uk/members/scott/blogview?entry=20110124133546
While SSJS is interesting, not all implementations include a DOM. Furthermore, each implementation imposes limitations as to web server, languages, and other platform-specific considerations.
SQLDOM was originally born out of a desire to perform DOM-based creation of HTML directly within Microsoft SQL Server, with no external dependencies. While SQL Server does include a good XML parser, it is not terribly useful for HTML.
Imagine having HTML templates--either in a SQL table or passed in--and being able to directly merge those templates with live SQL data without relying on a web server scripting environment like PHP or ASP.NET. Such a capability would allow for generation of clean standards-based HTML, and would support best-practices in terms of separation of layout from content. But, such a capability would not require an added scripting layer such as PHP or ASP.NET.
This would reduce the number of moving parts in a web application, and would potentially increase security and reliability while simplifying support and potentially increasing both performance and flexibility.