Currently the <panel> element is used to create temporary floating popup windows. The normal type of panel should be used for popups that the user interacts with temporarily, then dismisses by clicking away from it, pressing a close button or presses the Escape key. In a sense, they act like modal dialogs but aren’t actually modal. The bookmarks ‘star’ panel is an example.
The second type of panel, created by setting the noautohide attribute to true, is of a more persistent nature. However, it currently isn’t as useful as it should be. I’d like to make it more useful by allowing it to be used for floating tool palette windows.
In some cases, a separate window could be used instead. However, this can be inconvenient when there are only a few buttons or fields due to having to create a separate file. Also, windows tend to be separate, more permanent entities that appear on the operating system window list, whereas panels are smaller and are generally associated with another window.
See Panel Improvements for some ideas on what kinds of features would be useful. Let me know if there are other features I’ve not included on the list, or if you’d like to help.