Explain when would you call getApplicationContext() and why?

You only use getApplicationContext() when you know you need a Context for something that may live longer than any other likely Context you have at your disposal. Scenarios include:

• Use getApplicationContext() if you need something tied to a Context that itself will have global scope. I use getApplicationContext(), for example, in WakefulIntentService, for the static WakeLock to be used for the service. Since that WakeLock is static, and I need a Context to get at PowerManager to create it, it is safest to use getApplicationContext().
• Use getApplicationContext() when you bind to a Service from an Activity, if you wish to pass the ServiceConnection (i.e., the handle to the binding) between Activity instances via onRetainNonConfigurationInstance(). Android internally tracks bindings via these ServiceConnections and holds references to the Contexts that create the bindings. If you bind from the Activity, then the new Activity instance will have a reference to the ServiceConnection which has an implicit reference to the old Activity, and the old Activity cannot be garbage collected.
• Some developers use custom subclasses of Application for their own global data, which they retrieve via getApplicationContext(). That’s certainly possible.