For example, players could use their devices as a "gun," and the GPS, gyroscope, and accelerometer in the iPhone would all work together to figure out if shots "fired" from one device would actually hit another. Consider a wireless, high-tech form of laser tag on a large scale.
The patent also describes using accessories to play the game (such as a gun grip handle to place your iPhone in as you play), or even using the accelerometer to do other things like steering a virtual vehicle around. The whole thing sounds pretty wild -- it's hard to believe that Apple is actually working on a full-featured game like this, but given that we know they're already working on "co-located," collaborative apps, it's not much of a stretch to think that a patent like this originates from that kind of thinking.
Plus it just sounds fun. Apple hasn't released a game themselves since Texas Hold'em back in the early days of the App Store, but I wouldn't mind giving this one a try.