Purge is useful in 10g when you want to "really truly drop a table". In 10g, tables can be restored after being dropped.

When you drop a table in 10g like this:
drop table table_name;

Oracle renames it (moves it to the recyclebin) and the table is not (truly) dropped.
You can get it back:

flashback table table_name to before drop;

Note: You can't flashback objects in SYSTEM tablespace. So be careful.

I f you want truly drop a table use purge:
drop table table_name purge;

Now the table is gone and you cannot fashback:
flashback table table_name to before drop;
*
ERROR AT LINE 1:
ORA-38305: OBJECT NOT IN RECYCLE BIN