Well, I just create Albums as "shortcuts" to Events I like, or collections of photos of e.g. "Best from Winter", where they are all in separate Events of "Xmas Day", "Christmas Market" etc.
I think of it as the Events view being of (e.g.) your Documents folder - here you can see all your documents and view them. Your iPhoto sidebar contains shortcuts to some of these folders through the creation of Albums. So, I might only have 5 or so albums in the iPhoto sidebar; the Event "Xmas Day 2007" might be one of them because I like to view that a lot. Also, one of the other Albums I have in the iPhoto sidebar might be three Events selected and dragged to the sidebar, so as to create an Album that contains all the photos in those 3 events, but without creating another Event itself and duplicating all the photos.
This sounds complicated but really Albums, in my opinion(!) are useful for:
* Shortcuts in the iPhoto sidebar for commonly viewed/much loved Events when you have loads of Events to scroll through to find those
* As a way of creating "collections" of particular images/multiple Events in a way that does not result in the duplication of the images (i.e. as would happen if you were to create another Event instead of an Album) Think of it like this - an Album simply points to existing photos, an Event creates/duplicates photos.
If you look at my iPhoto sidebar:
"Christmas Day 2007" and "Rome 2005" are favourite Events I have dragged to the iPhoto sidebar for easy access to viewing them.
"Fav Winter" and "Family Pics" are collections of images that I deem to be my favourites, e.g. my favourite pics from winter. This is instead of duplicating the photos and putting them in another Event of favourite photos. Remember that Albums just point to photos, they don't duplicate them - but they behave/look the same. I mean, if there was one pic that comes up loads in these collections (e.g. Grandma drunk beside the Christmas tree), if you created Events instead of Albums for these collections it would be duplicated every single time it appeared. As is it, with Albums it just points to the single image, so you can create as many Album collections with it in (I have it in "Fav Winter" and "Family Pics"
), you still just have the one original photo on your hard-drive.
Note that to select photos from multiple Events to drag to the iPhoto sidebar to create an Album you probably need to be in the boring ol' "Photos" view.