FlyerTalk is very western country-centered, but Chinese transit visas exist and have always existed. These particular visas, now designated as type G, and obtainable in advance as per any other Chinese visa, would be uncommon for a citizen from a developed country to get since TWOV started AND since regular Chinese tourist and business visas are pretty easy to come by. And as pointed out above, the cost of a transit visa is the same as a tourist/business visa for a given nationality, so why would anyone settle for less? I'm sure there are some theoretical scenarios we could come up with where certain specific developed-country travelers might need to get a transit visa, but those apply to such a minuscule number of people, why bother?

However, for citizens of some developing countries--including certain neighbors--the Chinese still do grant transit visas. Typically they do this when the traveler needs to cross or enter/leave China but TWOV is not available, and the burden of application proof and support documentation for a regular tourist or business visa is difficult to meet. For citizens of many of these countries, in addition to the regular application that all of us encounter to get a regular visa, there is an extra burden of obtaining an official invitation letter from a Chinese governmental authority, something that westerners don't have to deal with. The transit visa does not require this--AFAIK it only requires the transportation involved in the transiting across Chinese land borders or airports. It is a convenient mechanism that allows the Chinese to limit the time presence (generally given for 3 to 7 days) of said national without completely shutting the doors, which is a diplomatic gesture.

Here's an example where I've met the protagonists first hand: Pakistani traders that cross the land border to China and use the KKH highway via Kashgar to get to the border with Kyrgystan. Not farfetched, probably happens on a weekly basis during seasons where the Khunjerab Pass is open. They use G transit visas, usually double entry (or maybe an Exit and Re-entry Permit which amounts to the same thing) so they can do the return trip on one visa. China is a big place with lots of possible permutations for travel entries and exits, and their current visa option array attempts to take all this into account.

But it can also be used at airports in lieu of TWOV. For instance, a Sri Lankan citizen wanting to transit China/Shanghai on the way to USA. TWOV is not available to Sri Lankans, so the solution is a G transit visa, received from the Chinese Embassy in advance of travel. If the terms of the G allow for 7 days, the Sri Lankan passenger would be free to explore China during that time period, and not be bound by the geographic limitations of TWOV since it is a real visa.