/team works only in Arena PvP or CTF. With the /team command, you can communicate with players on your team but the other team can't see the message.

For example like in CTF: /team don't let him get the flag.
Something like that so only your team can see. More of a strategy thing I guess. Better than just pm'ing each person on your team. But make sure your team knows the command because the /team chat looks the same as normal chat.