A timed quest could be used in a lot of ways. Maybe a person is pinned down by rocks in a cave and needs you to go get help in a nearby town. Well if you dont get help soon enough the person may die, or probably even get eaten by creature. Or maybe quest as subtle as go and kill a clan of vampires that sleeps during the day.
So timed quest could be go and accomplish this task and you have a set amount of time or literally has to die with the time of day itself. We have seen stuff like that lightly in Oblivion where people would want you to meet them at a certain time or certain things will reveal itself at a certain time of day. But I think its time to take it to the next level.