Retopology can be used both as a means of cleaning up a mesh and to create a totally new one.
In this case I am making new topology over my model and by following the shape of the night gown she is wearing, ends up with a new mesh - a dress.
If I skin this mesh I can use it as a standalone model or modify it further, or use it as a template for other clothes.
The difference of doing it like this, and to mask of an area of a mesh and use Mesh Extract to get a new tool, is that you have a topology you are happy with from the beginning.
It´s nothing special really, the workflow is the same as other retopology. I just find it to be a nice way to create nice and clean meshes.
I hope this was useful to you.