This procedure is motivated by one or both of two reasons; in response to collector demand, and to preclude the possibility that the stamps will be actually be used on mail.
While some collectors value mint postage stamps, others prefer to collect stamps that have been used. In practice, it is slow and difficult to build a comprehensive collection by soaking stamps from envelopes, and so modern postal administrations accommodate these collectors by offering their new stamps already cancelled. This has the advantage that the stamps can be officially used, without being subjected to damage by going through the system, and the postal administration can arrange for the cancellation to be relatively light and unobtrusive.
Another form of cancellation to order is practised informally by collectors working with postal clerks. This may take the form of a "favor cancellation" or "handback", where the collector gives the envelope with stamps to the clerk, the clerk applies the cancellation, and hands it back to the collector. Some countries' postal regulations permit this and others forbid it; it is misleading because the cancelled envelope appears to have gone through the mails without actually having been there. (For instance, it will be missing any additional postal markings that would have been applied to a real piece of mail on that date.)
A shadier form of informal CTO is the deliberate misuse of cancellation devices to make a stamp appear used. This can happen for stamps from remote places or in use for only short periods, where used stamps are more valuable than unused, sometimes by an order of magnitude or more. This form of philatelic forgery may include use of rare types of cancelling devices, unusual dates in postmarks, and so forth.
Another form of CTO is especially common from countries that try to make money from collectors by issuing large numbers of decorative stamps. In order to make more sales, the stamps need to be inexpensive, but if they were to be sold below face value, commercial mailers could save money by routing their mail through the issuing country, and the administration would soon be bankrupt. So these countries issue most of their stamps as CTOs. Such stamps are easily recognized; the cancellation is neat, usually in one corner and lacks a town name, and the gum is still present. Some countries, such as the emirates that later joined the United Arab Emirates, went further and had the cancellation printed directly onto the stamp along with the rest of the design.
It should be noted that many collectors do not consider stamps of this type to be authentic stamps, and some catalogues categorise them separately if they appear to have been issued solely for use by collectors.