When you first install an application that can handle the same intent as another application install (for the sake of this example, let's say a home launcher, but this works for any similar apps), then the first time you'd press the home button (which calls an intent to go to the home screen, which you now have 2 apps that could handle it), you'll get a selection screen of applications that can fulfill that intent and you'll have the option to set one of them as default.
If set an application as default and you no longer wish to use that application as default you can either uninstall the application OR you can go to Settings --> applications --> manage apps --> go to the app in particular --> and click on "clear defaults". This will reset the default application for that intent, so the next time you'd press the home button you would again get a selection of home launchers to choose from.