You almost can't seem to find a tutorial that doesn't use gaussian blur. Of course, it blurs surrounding pixels so they bend together more, causing a de-focusing effect.
then making a selection with the lasso tool and applying a 20-pixel blur, you get

Think about using gaussian blur to simulate depth-of-field effects. Say you made some effect but you can see unwanted graininess. Use gaussian blur. Or say your bump map shows some lines you didn't expect. Use gaussian blur on your map.
Or, start with a layer mask on an photo

then apply a 40 pixel gaussian blur, and your mask now looks like

Now your photo has a nice gradual fading effect.
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| gaussian_blur0.jpg | 5.19 KB |
| gaussian_blur1.jpg | 6.18 KB |
| gaussian_blur2.jpg | 2.5 KB |
| gaussian_blur3.jpg | 5.34 KB |