In a templating system a substitution of this form can be used to do a lookup on variables being substituted with replacement from a pre-populated hash. 
my %myHash = (hello=>"Howdy", goodbye=>"See ya");

while (<DATA>)
{
    s/\$(\w+)/$myHash{$1}/eg;
    print;
}
__DATA__
When I want to say hello I say $hello.
When I want to say goodbye I say $goodbye!

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Update Whoops! Thanks Abigail! This started as an example that used a sub to do the look up in a database but I got all lazy and just did it as a hash. Some revised (incomplete) code below. 

s/\$(\w+)/dbLookup($1)/eg;

sub dbLookup {
# Do database lookup (which would take a few more lines!)
return $lookedup ? $lookedup : '';
}

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In reply to Re: how do I use s///e by inman
in thread how do I use s///e by PastisALo

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