Imagine a VHS tape that is only 5 minutes long, then imagine that the end of the tape is joined to the start (even though this is physically impossible with VHS). Then connect the camera to your VHS deck and hit record. The deck will record forever, and overwrite anything over 5 minutes old. If something interesting happens, you can stop the tape and archive it. This is useful in a car environment as it provides evidence of other people's stupidity that you can use in an insurance claim.

How that app implements this is it records AVI files up to a certain length or size, once that length is reached it starts a new file. If at this point there are more than (say) 5 files in the system, it deletes the oldest one. It also has an archive button that stops the current recording and moves all the files into a new location, then starts a new file.

An obvious example of where this is useful is the situation where someone cuts in front of you with only a few feet to spare, then slams on. Normally a rear end impact is automatically your fault, but with the video evidence it would become their fault.