Robert,
You know the list of log providers that you get when you set up logging in your package(s)? i.e. Text File, SQL Server, Event log etc...
A custom log provider will show up in there.
The benefit of them is that you can capture whatever you want rather than just a subset what Microsoft have allowed you to capture. For example, you could capture the duration of all your tasks - that's not included in the out-of-the-box providers.
-Jamie