Why can I define a function in another function?

see the code below, I define a function in another function,

void test1(void)
{
 void test2(void)
 {
   printf("test2\n");
 }
 printf("test1\n");
}

int main(void)
{
 test1();
 return 0;
}

this usage is odd,is it a usage of c89/c99 or only a extension of gcc (I used gcc 4.6.3 in ubuntu 12 compiled). I run this code and it output "test2" and "test1".test2 can be only called in test1.

What's more,what's the common scene of this usage or what does this usage used for?