Nobody said it was just for when a thread needs to fetch data from memory. That was just an example. And to be fair, when compared to a single threaded core that is the main advantage.
The argument that AMD is using CMT and Intel is using SMT is A. A little advanced for a self proclaimed noob like the OP, B. Not entirely that simple, like I said memory reads take an eternity and memory writes take longer in CPU land, so to be fair most threads are actually spending time idle whilst carrying out reads and writes. When those memory reads do come, they must be put into cache, which cannot be coherent between threads. This means that each core must split their cache in two, one for each thread, and as a result has half the cache per thread that it would usually have. Then there's the actual pipeline. Any and all micro code must be duplicated. Any and all pipelines must be duplicated. You are effectively building a second core inside the core in a lot of ways. Funny thing is AMD's scheduling is far more efficient than Intels and it shows on multithreaded benchmarks when you look at the advantage multiple cores have.
Finally, I will quote Ars directly. "AMD claims that in the real world, a single two-way SMT core works as well as 1.3 regular cores, because the threads don't wait on main memory but on execution resources to free up. In other words, in cases where main memory is not a bottleneck, the execution units quickly become oversubscribed and an SMT core quickly becomes a bit less efficient than a non-SMT core (i.e., it performs just like a single-core design, but it has extra hardware, so it's overall less efficient)."
See: http://arstechnica.com/business/2010/08/evolution-not-revolution-a-look-at-amds-bulldozer/