One use case for modelines was specifying the encoding of the file:

    # vim: set fileencoding=iso-8859-1

Trivia bit: the Python interpreter understands Vim and Emacs modelines as encoding declaration for source files: https://www.python.org/dev/peps/pep-0263/#defining-the-encod...

Another use case was specifying the indentation scheme for the file for weird conventions like "2 space indentation with 4-column tabs" (first level is two spaces, second level is one tab, third level is one tab plus two spaces...)

Fortunately now everything's UTF-8 and weird indentation schemes are uncommon.