The aim is to select an area that blends nicely into surroundings. What one needs to do first is to create transparent layer and add the layer mask on it:
1) 'Layer > New layer' and make sure it becomes transparent.
2) Make sure you have black set as the foreground color and white as the background color.
3) Right click on the layer in the Layers Pallet and choose Add Layer Mask, and in the following dialogue select White (full opacity).
Next you need to decide what you want to select. If it is a round area in the middle of the picture, then do the following:
1) Click blend tool on tools box.
2) Select round shape.
3) Check the small box on right side of the 'Gradient' to make the selection inverted.
4) Do the selection by drawing a line from middle of the picture all the way to one of the corners.
5) Right click on the layer in the Layers Pallet and choose Mask to selection.
6) Select the background layer in the Layers Pallet to move the selection on that layer.
Now you are probably surprised to see the selection seems to be smaller than you thought. But the dotted line only shows the "middle area". The area covered by blend selection is actually much bigger. Now you can do what you want for the selected area. You can for example adjust color balance.
This way to do the selection is useful for several purposes. For example some mobile phones makes the middle of the pictures reddish, and by selecting round area to correct the color balance like this, the effect blends nicely towards the edges.
Another trick where this is needed is the tilt shift effect that I have explained earlier.