How to keep your customers from abandoning your software

I love thoroughly referenced blog posts like this. It's nice to discover some of the inspiration behind the ideas.

Though I do have a question. He mentions the following:

"You can cultivate habitual use by careful observation of the most important tasks your users need to accomplish. If you understand the situations your customers are in when they're accomplishing tasks in your software, then you're on the right track."

What would one to do to understand the "situations" customers are in? Is he referring to the state of mind a person would be in while completing a task?