The time zone support is primarily for diary/calendar apps - but other apps use it too.
It's for the situation where you're in, say, LA on business from the UK. OK - they've scheduled a conference call for 5pm UK time which is 9am LA time (well, OK, once all this daylight savings time mismatch is over after this weekend - with the US being on daylight savings now, but the UK not until Sunday.) Your office emailed you the time of the conference call - and they said 5pm. You use the Mail feature to put it in your diary but what time should it put it in at? If you have Time Zone support on and set to LA, then you'll find the entry will go into Calendar at 9am and any alarm will go off at that time. The neat part is that, when you return to the UK and set the Time Zone Support back to the UK, that entry will return to its correct UK time - 5pm - in case, for example, any colleague comes to see you and starts to talk about the conference call "What time was it at?". You check in your iPad's calendar and, hey, it says 5pm....clever stuff.
If you have 3G then the iPad gets its time from the network's server. If you've configured time in the 'Settings', 'General', 'Date and Time' -> automatic this will change automatically on Sunday. Furthermore, like your 'phone, if you take your iPad to the US and have 3G switched on and you are roaming then it will pick up the local time in the US without you having to adjust it.
If you don't have 3G then it uses the WiFi location to determine your position, if it can for this function. If it has Internet connectivity and knows where you are it then uses the Internet's NTP (network time protocol) to find the correct time and then adjusts it for your location.....
All that technology just to get the correct time....
Tim
Scotland