I was playing around in python. I used the following code in IDLE:
p = [1, 2]
p[1:1] = [p]
print p
The output was:
[1, [.
To the question "What's its use", here is a concrete example.
Graph reduction is an evaluation strategy sometime used in order to interpret a computer language. This is a common strategy for lazy evaluation, notably of functional languages.
The starting point is to build a graph representing the sequence of "steps" the program will take. Depending on the control structures used in that program, this might lead to a cyclic graph (because the program contains some kind of "forever" loop -- or use recursion whose "depth" will be known at evaluation time, but not at graph-creation time)...
In order to represent such graph, you need infinite "data structures" (sometime called recursive data structures), like the one you noticed. Usually, a little bit more complex though.
If you are interested in that topic, here is (among many others) a lecture on that subject:
http://undergraduate.csse.uwa.edu.au/units/CITS3211/lectureNotes/14.pdf