We have lots of configuration automation tools: Chef, Puppet, Ansible, SaltStack, etc. These tools make it easier to orchestrate the modification of configuration files on a node. That is well and good.
However, what is my "source of truth" for how things should be configured? Does the fact that node593958.my.co is my primary database server for app foo belong inside Chef, or another tool, or is it more suited for a "directory" of sorts?
No one can answer that but you. But, if you decide that it shouldn't be embedded in your configuration orchestration tool, you may decide to put it in a key value store like etcd. etcd could expose (via REST), something like:
.../apps/foo/primary_db = node593958.my.co
Configuration management could then key off of that source of truth to configure the application appropriately.
etcd exposes an easy to use REST interface to arbitrary storage of hierarchical keys and values.
Nothing is new under the sun. During the first five minutes I was playing around with etcd, I realized I was effectively reinventing LDAP. This is neither wrong nor right, it's simply a different tool for the job. If you like REST and simple interfaces, it's probably a good tool.
Imagine that, but across multiple servers at once. Plus a few other things that some use cases have been built up for.
If it's all one the same box, that's trivial.
But imagine you have several app serves, and several other systems that all needs to talk to the database. Then one day you need to change details of the database server. Now you can either use a tool to update all the configurations (or do it by hand), or you can have all of these apps pull the database config from a distributed directory of some sort.
Etcd is such a directory. Similar to LDAP, but simpler (LDAP requires you to write schemas, and decide which attributes to index on and in set up replication hierarchies). Some people also use DNS for this (you can put arbitrary data in a private DNS server).
There is more to configuration management that templating files, but in inspection and having other services arriving at other states.