The final report in the Visitors section of the Google Analytics interface is titled User Defined. Essentially, it provides you with the ability to assign a parameter to each visitor to your website, allowing you to track them. This creates the opportunity for you to analyse the behavior of various segments within your website.
Although the possibilities are numerous, here are a few ideas of the kind of things you can achieve with this report.
It is possible to create a segmentation which reduces the anonymity of certain visitors on your site. If your site has a form on it that asks users to select their age, gender, profession etc you can assign a piece of tracking code for each group that will essentially follow them across your site. You would then be able to determine which age group etc. are providing the highest conversion rates or simply what content they are viewing.
If you don't have a form on your site but have different sections dedicated to 'students', 'staff', 'parents' (for example) you could install the tracking code on each of these primary navigations and follow them across your site to get a better idea of what content interests them.
For those websites with a membership base, identify what users that are logged into your website are doing compared to what those that are not logged in are doing. Are levels of engagement longer when a user is logged in? Which pages are users not logged in viewing before they log in? These types of questions can be answered with user-defined and can assist in building a website with longer average times on site and return visits leading to more conversions.
One of the most useful applications of this report is to test the success of your various landing pages. Each landing page can be assigned a piece of tracking code to track visitors coming in on these pages. You can then see which landing pages (which begin the conversion process) are actually resulting in conversions. Not only does this show you the most effective landing page, but also the most effective campaign you used to drive visitors to that landing page (whether it be print, TV, SEM etc).
There is no hard or fast rule on how to apply this function of Google Analytics, it's up to you and your unique business needs as to where to place the code to track relevant visitors. This is therefore more of an advanced application of Google Analytics and may require professional assistance.