I'm going to get straight into the example to try and explain this one.
Take a game like golf on the Wii. One of the biggest problems right now from what I can tell is that it is difficult to gauge when the player lines up for his shot (pointing at that imaginary tee). The thought is to place an IR source at this imaginary tee's location. It doesn't have to be big or powerful as it only needs to be effective for a few feet. That way when you go to line up for a shot, the software can get a definitive starting point at which to calculate the rest of your swing. It would also make putting much more effective as you can handle the very subtle movements with more precision.
I don't think it would be that costly to include such an item with a golf game, and would be worth it if it lent for a better simulation experience. (I picture a cheap small (8" square) plastic sheet with small tee that actually houses an IR LED and a place for a AAA or watch battery on the underside)