As I understand this, it's mainly for desktop managers (KDE, XFCE, GNOME) to interface with your various applications, but not so much for you (the user) to use as if it were a command line:
The idea, I believe, is for when you are (let's say for example) reading a PDF file with some PDF reader, and the PDF contains a URL (a web address) and you want to open the URL in your browser. Your DM knows what browser you like and how to start it up, while the PDF reader itself does not necessarily know how to start a browser, nor what browser you like, nor necessarily what to with a URL at all. So, it passes the request (the URL) to the desktop manager.
In the case of %u (a single URL) you have your desktop manager configured such that when a URL is clicked from whatever application (PDF reader passes a URL to the DM) your DM knows that when it gets a URL from an application, it should execute "firefox %u", which results in the DM expanding the %u with the single argument it's given (the URL) to create a command-line like `exec firefox www.blah.com`, and fire up the browser to open that URL.
So, further example, what about %U (a capital U)? This indicates a list of URL's; so if the PDF reader (or whatever application) sends a list
of URLs to the desktop manager to deal with, the desktop manager knows (because you have it configured) it should exec the command "firefox %U", and so expands the %U into "www.blah.com www.goop.com
www.urgleburgle.com", resulting in an exec-command-line like "exec firefox www.blah.com www.goop.com
www.urgleburgle.com" and your firefox fires up with 3 tabs (or 3 windows) each with one of the URLs.
As implied above (and indicated by the other posters), this isn't useful for you to start firefox yourself from a commandline with a % code, because you know you would simply need to type "firefox www.blah.com www.bloop.com
www.blargh.com" to achieve the desired result.