This test is used for the quick and easy determination of the relative atmospheric humidity. The paper is simply exposed to the atmosphere in question. When the colour of the pad does not change anymore, the humidity can be read off.
Moisture sensitive goods e.g. electronics and optical systems have to be stored at low atmospheric humidity. They are usually packed in sealed plastic bags together with a desiccant.
Moisture indicators are used to control if the desiccants is active and if moisture is effectively kept away from the goods.