It's also used quite often in moments of tension or uncertainty, where characters aren't speaking much, if at all, and something is needed to convey a sense of fear or uncertainty in the audience. Music in games provide so much that it's hard to understand why it's not an integral part of the design document. A music theme is a game designer's best friend. In fact, one of my greatest disappointments with the Wing Commander series is that they didn't keep the powerful themes from Wing Commander 2 and use them in the rest of the series. Somehow the Kilrathi theme found it's way into Ultima 7, but not Wing Commander 3.
Themes also provide audio cues that tie a game together.
When we hear the Imperial March in a Star Wars movie, we know what that means, and we don't have to see a thing. With promising new music and sound technologies on the immediate horizon, music is once again being thrust into the forefront of a game developer's considerations. The primary new technology coming down the road is DLS, or Downloadable Sounds. It's part of DirectMusic, which will be appearing in a DirectX 6 upgrade at the end of this year, and it allows for MIDI playback with custom instrument sounds supplied by the game author, rather than the general MIDI sounds packaged with your sound card. This means that instruments will sound roughly the same on everyone's machine, and game developers can provide exactly the sound they want.