It is possible to create WBS milestones at any level apart from activities. Under what circumstances you would use these to update progress?

WBS Milestones (i am guessing finish milestone) can be created by connecting all the activities in the WBS to a finish milestone so that this indicates completion of all the work under that particular WBS. But, it will be in the same level as of other activities. Then may be these milestones can be given a seperate activity code and using filter can be extracted to present only key dates for the WBS, good for a quick presentation with out all the details. (above comments in context of P6 only).

Purposes of creating WBS is to monitor the progress by specific items/breakdown so later it be useful for cost allocation exercise. When any activities happen in relation to the WBS, the progress will be updates & monitor whether it was as planned or below plan or above. The progress later will be analyse & cascaded up to Management level for any strategies or changes or action meed to be taken, accordingly.