I heard about someone doing this, and I don't fully understand the reasoning behind it; does it mean that they need the money in their bank account for some other pressing bill, and if they offset something they already bought on a layaway it means they can free that money up for the bill and pay off the shoe later?
I think you’ve already figured out the answer.
The person wants the shoes, but realizes that they don’t now have the money to spend on shoes, and buying now was a mistake. So they return the shoes, get their money back, but put the shoes on layaway so they can pay for the shoes in installments.
Of course, layaway plans usually involve a service fee, so you end up paying more than if you had paid in full on the day the purchase was made, but you ensure that the item will still be there in the store when you have all your money ready.