To illustrate transformation between various forms of energy and to perform yo-yo tricks.
Yo-yo, as photographed.
Simply holding the end of the string to allow the yo-yo to unwind and wind back up again illustrates transformation between gravitational potential energy and rotational kinetic energy, with a lesser amount of translational kinetic energy. See Demonstration Reference File for further information on yo-yo tricks.
William Boudreau, Cheap and Simple Yo-Yos, TPT 28, 92 (1990). Lecture Demonstration Instructions Sheet.