What is a sealed trait?

A sealed trait can be extended only in the same file as its declaration.

They are often used to provide an alternative to enums. Since they can be only extended in a single file, the compiler knows every possible subtypes and can reason about it.

For instance with the declaration:

sealed trait Answer
case object Yes extends Answer
case object No extends Answer

The compiler will emit a warning if a match is not exhaustive:

scala> val x: Answer = Yes
x: Answer = Yes

scala> x match {
     |   case No => println("No")
     | }
<console>:12: warning: match is not exhaustive!
missing combination            Yes

So you should use sealed traits (or sealed abstract class) if the number of possible subtypes is finite and known in advance. For more examples you can have a look at list and option implementations.