A journal is a specific form of story-telling in gaming. Often-times it is difficult for a DM to convey history in a place, and so they must use methods that show that story in a direct manner. Journals are one of the best ways to show this, in my experience, and allow DMs who like writing (such as myself) a fun distraction from adventure-crafting.
Journals, besides showing a story, can also be used as evidence against a character. Finding the true thoughts of a person can be damning when they are suspected of a crime. Of course, it's silly to imagine that every NPC records every action they take, but an occasional diary here and there can really spice up an otherwise dull character, especially if they are not talkative and closed off.
Journals can be used as a hint of the villain's innocence as well. I once had a journal mention that it's owner was going to soon head north where there had been reports of "creatures of madness and nightmare". North of the party's location was where they had inadvertently released aboleths from a realm of pure madness. Putting two and two together, they could theorize that perhaps the character was not in fact so much an evil person, as potentially under the control of an aboleth. It was up to them to decide whether she was worth the attempt to save or not.
When a player finds a journal, I often decide to trap it. Just like modern diaries, no one much likes others reading their personal thoughts, so it makes sense to me that they would protect themselves with a trap. A glyph of warding or a sigil spell if the owner is magical, and usually a small mechanical trap if not. When a journal sets off a trap, obviously the type of trap could lead to disastrous results for the journal. Fire and acid are not the friend of paper, though a clever arcane caster could imbue an illusion of the journal burning in the resulting explosion, thereby keeping his journal safe without having to destroy it.
Diaries can also be used to explain what happened in an area, when other avenues of inquiry are less revealing. Journals can reveal the reason why an entire city is abandoned, or go into depth of a particular person's experience. The character could have been scared, or attempting to comfort a child, or enraged at an enemy. A diary is first and foremost in my mind a way to make the players care about either the author, or the people they represent. A deeper look into their psyche and what they were feeling at the time they wrote the entry.
I have often used journals to give players vital information. One journal they found was written by a man who challenged a god in combat. The author revealed that the god tends to favor his right side before he died of his wounds, which the players used to gain an attack bonus against the god. Another time they found a journal that intimated that the killer they had been tracking down was in fact an old arch-nemesis of theirs.
There are very few limits to what can be done with a journal story-wise, and I highly recommend using them when applicable. They are the easiest clue to the events of the past, and will help to emerge your players in the game and hopefully to care about characters that aren't their own. Thank you for reading, and stay tuned tomorrow for "K is for Knowledge".