Essentially the custom fields on taxonomies work the same as how you would use them for posts.
A context in which you can use them is to provide any additional details about the particular taxonomy that you would want to display on the frontend when this particular taxonomy is being used.
I can't think of many scenarios where this will be used but the function is the same as with posts.
Here is an example, let's say you have a taxonomy of Cities but you want to put on a map exactly where the city is located. You can add an address field to the taxonomy and then put in the address of the exact city this way you can know where the city is as opposed to another city of the same name.
Please let me know if this provides a bit of clarity for you.
Thanks,
Shane
The above tutorial have the exact same steps on how you will add the address field to the taxonomy. So the tutorial should provide enough information to get you started.
If there are any specific details you're unsure of after looking at this document please let me know.
Thanks,
Shane
