I've gotten this question (again) and decided to explain it here so that Google can find it.
To illustrate this functionality, imagine you have an input map from a database connector with an attribute that gets its source value from a db column named 'TITLE', and that this column is nullable. In other words, not all rows need to have this column value. Alternatively, it could be an object repository (like an LDAP directory) and that the attribute in question is not found in all entries you are reading. During the mapping processes, SDI discovers that the source attribute (conn.TITLE) is not found. Null behavior will detect the 'null' and remove the attribute from the Work Entry.
Now imagine you are reading from a CSV file. In this case there are no missing attributes or null values, only empty string values for some attributes. So now you can change Null Behavior to define 'null' as being an empty string (plus all the other definitions over it in the Null Behavior dialog). Furthermore, you can define handling to be that you want a default value returned - for example N/A. Violà, now all rows with an empty value for 'TITLE' will be returned with this attribute value set to 'N/A'.
Final note: Null Behavior can be defined at the map level using the More... button at the top of the map, or for a single attribute by right-clicking it and selecting Null Behavior.