The end of the variable name is usually signified by a space or newline. But what if we don't want a space or newline after printing the variable value? The curly braces tell the shell interpreter where the end of the variable name is.
TIME=10
# WRONG: no such variable called 'TIMEsecs'
echo "Time taken = $TIMEsecs"
# What we want is $TIME followed by "secs" with no whitespace between the two.
echo "Time taken = ${TIME}secs"
# WRONG - no such variable LATESTVERSION_src
CLASSPATH=hibernate-$LATESTVERSION_src.zip:hibernate_$LATEST_VERSION.jar
# RIGHT
CLASSPATH=hibernate-${LATESTVERSION}_src.zip:hibernate_$LATEST_VERSION.jar
(Fred's answer already states this but his example is a bit too abstract)