Modes are used as a filter on rules. There are two kinds of modes: one for the security features and one just for the general home automation system. The second one is called the “location mode.“ When you set up a smartthings Account you get three location modes: home, away, and night, but you can add more if you want.
Just as an example, at my house we set the location mode to “home” at 7 AM every morning. We set the location mode to “night” at 15 minutes before sunset. When the location mode is home, a motion sensor event In most of the Upstairs rooms doesn’t do anything. When the location mode is night, those same events turn on the overhead light in those rooms. We have another mode we call “asleep.” Once we go to bed, we change the Location mode to that and then the motion sensor events do not turn on the overhead lights, but instead turn on a soft nightlight. You can change the modes with an automation. Same sensors, different outcome, because the location mode is different.
You can read more about modes in the following FAQ: