I am having difficulty in understanding the significance of classLoader in ResourceBundle.getBundle(bundleName, locale, classLoader) API .
What could be the practical scenario where someone would want to provide custom loader for this API?
A Java application might have multiple class loaders. For example, a J2EE application running on Tomcat or Glassfish has multiple tiers of classloaders - some belonging to the J2EE server itself, some being specifically made for your webapp (otherwise your webapp would be able to access classes belonging to other webapps) and even custom classloaders that you might have instantiated yourself.
Standalone Java apps might also have multiple classloaders. For example, if your application supports plugins and each of these plugins is contained in its own JAR file (local or remote) then in order to load the plugin's classes at runtime you would have to create your own classloaders to do so.
Therefore, when you load a ResourceBundle you have to select the appropriate classloader to ensure that the resource is loaded from the correct source. Here's a simple example... imagine that your application contains a /version.properties file and your JVM also has a similar, yet different, /version.properties (e.g. IBM's Java has this properties file). Trying to load this resource file using the system's default classloader returns the version.properties that is included in the JVM and in order to load your own version of this file, you must use a custom classloader or one whose context is specific to your app.
There is an old but still very interesting explanation of how class loaders work and how hierarchies and loading contexts are useful in practice. For more info, check Internals of Java Class Loading.