From InfoSec SE
This Security.SE answer should be read before the answer posted here. The following block quote and FPS example are taken from the answer linked.
Functional encryption is about providing a computable circuit (obfuscated with IO) which receives as input encrypted versions of some value x, and returns F(x) for some function F, without revealing anything else about x. The authors show how they can do that for any function F which can be encoded as a circuit, and the resulting obfuscated circuit is "polynomially-sized" with regards to the original unobfuscated circuit implementing F.
The quote above, and following example, are from Tom "The Bear."
He states a good example is for a FPS (first-person shooter) video game that could prevent players from cheating. The gist of his example is that each player's system only gets data from the server, rather than being able to read from an opponent's device.
The most obvious theoretical comparison is to homomorphic encryption. This involves performing computations on encrypted data without decryption first. An additional comparison is in formal methods for software engineering, such as the HACMS project.
Drawing from DARPA's HACMS project, it's possible to segment software, and therefore functions, such that control of one component doesn't allow any control of any other component.
If you only look at these two features, that of homomorphic encryption in addition to the HACMS project you could argue that IO is practical. But when you factor in everything else, detailed by Tom in the first link of this answer, it doesn't seem very likely for the foreseeable future.
The upshot is the potential for homomorphic encryption with added safeguards against attacks such as feng shui based on rowhammer. Looking more to the future, we may see self-driving cars communicating via a cloud accessed based on proximity. Essentially each area of a road communicates with cars in that area, while performing computations to assist the self-driving cars' navigation. If IO is optimized enough to be practical, this would help secure everyone on their daily commutes.
For a better list of examples, click the HACMS link above.