Have a look at this tutorial, which explains how to partition your hard drive: Partition or Volume - Create New
Many of us do it to create a separate partition for personal data.
It enables us to create two separate backups: a system image backup of the Windows drive and a separate backup of the personal data drive.
The important thing to remember is that you cannot create more then four primary partitions on a single drive. If you need more partitions, you would need to create logical partitions as part of an extended primary partition.