You can use an annotated annotation to create a meta-annotation, for example consider this usage of @Transactional in Spring:

/**
* Shortcut and more descriptive "alias" for {@code @Transactional(propagation = Propagation.MANDATORY)}.
*/
@Target({ElementType.METHOD, ElementType.TYPE})
@Retention(RetentionPolicy.RUNTIME)
@Transactional(propagation = Propagation.MANDATORY)
public @interface RequiresExistingTransaction {
}

When you enable Spring to process the @Transactional annotation, it will look for classes and methods that carry @Transactional or any meta-annotation of it (an annotation that is annotated with @Transactional).

Anyway this was just one concrete example how one can make use of an annotated annotation. I guess it's mostly frameworks like Spring where it makes sense to use them.

Annotation are basically additional metadata (information) that goes along with your code. It can be placed along side types (Classes, Interfaces), methods, and arguments.

It is often useful during compile time and runtime. Many popular APIs such as Java EE 5+, Spring, AspectJ leverage annotation for code clarity and consistency.

Using annotation often allows code to be more readable, more easily understood.

I'd recommend you read through the annotation chapter on Java tutorial

In the past metadata are often given as an xml file, and it's difficult for someone trying to understand the code if they have to lookup a different xml configuration file. The latest Java servlet API allows mapping of servlet simply by using annotation -- as opposed of web.xml mapping:

@WebServlet("/response")
public class ResponseServlet extends HttpServlet {
// servlet code here...
}

For example, if annotation looks like

@Target(ElementType.TYPE)
@Retention(RetentionPolicy.RUNTIME)
public @interface SomeAnnotation {


String description() default "This is example for class annotation";
}

the compiler will complain in this situation

@SomeAnnotation
public class SomeClass {


@SomeAnnotation    // here it's complaning
public void someMethod(){}
}

If you change

@Target(ElementType.TYPE)

to

@Target({ElementType.METHOD, ElementType.TYPE})

it won't complain anymore.

Each annotation annotated by @Target(ElementType.ANNOTATION_TYPE) is called Meta-annotation. That means, you can define your own custom annotations that are an amalgamation of many annotations combined into one annotation to create composed annotations.

A good example from Android world is StringDef

Denotes that the annotated String element, represents a logical type and that its value should be one of the explicitly named constants.

@Retention(SOURCE)
@StringDef({POWER_SERVICE, WINDOW_SERVICE, LAYOUT_INFLATER_SERVICE})
public @interface ServicesName {}


public static final String POWER_SERVICE = "power";
public static final String WINDOW_SERVICE = "window";
public static final String LAYOUT_INFLATER_SERVICE = "layout_inflater";

Code inspector will treat @ServicesName and @WeekDays in the same way as @StringDef. As a result we can create as much named StringDef's as we need and override set of constants. @Target(ElementType.ANNOTATION_TYPE) it is a tool that allows to extend the use of annotations.

Annotation is defined like a ordinary Java interface, but with an '@' preceding the interface keyword (i.e., @interface ). Annotations are used to provide supplemental information about a program. On the other hand, an interface can be defined as a container that stores the signatures of the methods to be implemented in the code segment.

1. WHY to use @Target(ANNOTATION_TYPE) value?

When there is need to apply an annotation to an another annotation. If you look at the source codes of the common Java annotations, you see often this code pattern:

@Target(ANNOTATION_TYPE)
public @interface TheAnnotation
{
...
}

For example,

@Documented
@Target({ ANNOTATION_TYPE })
@Retention(RUNTIME)
public @interface Constraint {
public Class<? extends ConstraintValidator<?, ?>>[] validatedBy();
}

2. What are the annotated annotations good for?

They are good or more precisely necessary if they are used to annotate other annotations.

3. What is their contribution?

They make possible to apply an annotation directly to an another annotation, that is a different thing than applying an annotation to a standard Java class or to method and so on.

4. Give me an explanation of an idea how it works and why I should use it.

For example, if you create a data model class and you may want that the program checks data validity. In that case, there might be need to create a new annotation and apply another annotations to this annotation. It is simple to add some data validity checks to this model by adding annotations to the class. For example, to check that some value is not null (@notNull) or email is valid (@ValidEmail) or length of a field is more than x characters (@Size). However, it is possible that there is not built in Java annotations for all purposes. For example, it is so if you liked to check if password and its matchingPassword are same. This is possible by creating the annotation class PasswordMatches:

@Target({TYPE})
@Retention(RUNTIME)
@Constraint(validatedBy = PasswordMatchesValidator.class)
@Documented
public @interface PasswordMatches {


String message() default "Passwords don't match";


Class<?>[] groups() default {};


Class<? extends Payload>[] payload() default {};


}

Note, there is line

@Constraint(validatedBy = PasswordMatchesValidator.class).

In other words, the annotation class Constraint, like the other annotations in this class also, must have ANNOTATION_TYPE as a value of target annotation.

Now the password equality check is easy to include to data model class simply by adding annotation @PasswordMatches:

@PasswordMatches
public class UserDto {
...
}

The PasswordMatchesValidator class could look like this:

public class PasswordMatchesValidator implements ConstraintValidator<PasswordMatches, Object> {


@Override
public void initialize(final PasswordMatches constraintAnnotation) {}


@Override
public boolean isValid(final Object obj, final ConstraintValidatorContext context) {
final UserDto user = (UserDto) obj;
return user.getPassword().equals(user.getMatchingPassword());
}
}

5. Some already existing and well-known example of its usage would be great too.

There is quite well-known example in item 4, but another known annotations which are applied frequently to custom annotations are @Retention, @Documented and @Target itself.