Unlocked multipliers essentially make it so you can push the CPU as far as it can before it explodes. They're great, and if you can afford one I will pay you $10 for it.
To know your limits, you usually start at a reasonable overclock, test it with a few benching and stressing apps, and if it's good kick it up a notch and repeat. At some point it'll fail a test or simply fail to start up, in which you back it down or alter the settings, voltage, etc, until you get your max OC.
Some programs scale proportionately with clock speed, others fairly well and some not at all (I doubt Starcraft will notice a difference between 3.0ghz and 4). There are thousands of graphs on the nets proving the worth of overclocking, many on or around anandtech's front page. There's an overclocking sticky, read that and with a little searching the subject will become easily understood.