Here's a scenario to help you understand...
Let's say you are taking photos for a wedding dinner in a hotel ballroom. Most hotel ballroom lights are warm, so let's just assume that it is tungsten. However, the hotel ballroom lights are insufficient to take group shots and you need to use a flash. The flash light is normally around 5500k, so lets say that it is white. When you take a group shot, with a flash, you find that the people whom your flash light hits has normal skin tones (WB: flash), but some distance in the background, you realize that the the skin tones for background people is very warm and orangy. So...
1. People who are lit by the light from the flash has ok skin tones (WB: flash).
2. People who are not lit by the light from the flash but by the hotel ballroom's tungsten lighting (and WB is still on flash) gets orangy skin tones.
The solution here is to make the light from the flash the same color as the light in the ballroom (i.e. tungsten) by putting an orangy gel in front of the flash light, then set the WB to tungsten, and wah lah! When you take the pictures, you get a consistent color throughout!
Hope this helps