Since UML provides a full-blown virtual machine, there has been a lot of interest in it from the hosting industry. Providing customers with individual virtual machines promises to combine the advantages of a dedicated machine for each customer with the administrative convenience of a small number of servers.
UML would give customers their own virtual machine that they could set up any way they want, with services that normally aren't provided by a hosting service because of potential resource consumption or security concerns. These would be hosted on a small number of larger servers, greatly simplifying the administrative work on the part of the hosting company.
It's also possible that UML virtual machines can produce greater performance at lower cost to the customer. For example, if a number of virtual machines are serving relatively low-traffic web sites, then only one may be active at any given time. This virtual machine will have the entire large server to itself. In constrast, with a normal colocation arrangement, this site would served by a single small physical machine. Depending on the virtualization overhead imposed by UML, it is possible that the virtual machine running on the large server could outperform the smaller physical machine.
A related application is sandboxing or jailing. Since UML is going to be a completely secure jail for whatever is running inside it, it has obvious uses for confining untrusted users or processes. A service that provides accounts for the public could isolate each user inside a virtual machine, preventing them from damaging the host or harrassing each other in any way. They could be given root access inside the virtual machine, which would let them destroy anything inside it, but they couldn't touch anything else.
UML can also be used to confine system services whose security is suspect. Prominent example include bind and sendmail. A sysadmin who wants to be sure that someone can't break in through one of these servers can run it inside a virtual machine. If someone cracks it, they gain access to the virtual machine, not the host. So in order to do any actual damage, they'd also need an exploit to break out of UML.