Both :). To give one specific example: I was working on a transformation-based learner for learning tree transformations. Say that a rule consists of an action and a list of condition that makes the action fire if they are true for a particular tree node. Obviously, you'll want to be able to add new conditions, so you make a type class for conditions:

    class Cond a l where
      applies :: a -> TreePos Full l -> Bool

Now, say that a rule contains a list of conditions which belong to the type class Cond (Cond a l => [a]). You can see the problem coming. Say I provide a condition of the type MyCondition, then the list will be of type [MyCondition]. However, in practice it would be inflexible to restrict a list of rules to one type. You want to be able to add new conditions outside the module or package binary. So, instead I used existential typing for conditions:

  data Condition l =
    forall c . (Cond c l, Eq c, Show c, Typeable c) => Condition c