It just expands into the last command you put in your shell, so it's useful for retrying a command that you want to prepend with sudo for example, if you realize you needed elevated privileges, or maybe you want to pipe something in it, pipe it through something, redirect its output etc.

Had to check since this is something I've been wondering myself, but apparently not possible. From the fish FAQ:

Because history substitution is an awkward interface that was invented before interactive line editing was even possible. Instead of adding this pseudo-syntax, fish opts for nice history searching and recall features. Switching requires a small change of habits: if you want to modify an old line/word, first recall it, then edit.

However, for the use case here, with sudo:

As a special case, most of the time history substitution is used as sudo !!. In that case just press Alt+S, and it will recall your last commandline with sudo prefixed (or toggle a sudo prefix on the current commandline if there is anything).

I thought I'd tried it in bash, but I think I must have only tried it in fish