When to Normalize a Vector?

I am learning XNA and in almost all of the educational kits found on http://creators.xna.com/en-US/. I always see a call to Normalize() on a vector. I understand that normalize basically converts the vector into unit length, so all it gives is direction.

Now my question is When to normalize and what exactly does it help me in. I am doing 2D programming so please explain in 2D concepts and not 3D.

EDIT: Here is code in the XNA kit, so why is the Normalize being called?

if (currentKeyboardState.IsKeyDown(Keys.Left) 
    || currentGamePadState.DPad.Left == ButtonState.Pressed)
{
    catMovement.X -= 1.0f;
}
if (currentKeyboardState.IsKeyDown(Keys.Right)
    || currentGamePadState.DPad.Right == ButtonState.Pressed)
{
    catMovement.X += 1.0f;
}
if (currentKeyboardState.IsKeyDown(Keys.Up)
    || currentGamePadState.DPad.Up == ButtonState.Pressed)
{
    catMovement.Y -= 1.0f;
}
if (currentKeyboardState.IsKeyDown(Keys.Down)
    || currentGamePadState.DPad.Down == ButtonState.Pressed)
{
    catMovement.Y += 1.0f;
}
     
float smoothStop = 1;
        

if (catMovement != Vector2.Zero)
{
    catMovement.Normalize();
}

catPosition += catMovement * 10 * smoothStop;