You don’t have to use it. It’s just one possible solution to the problem, to parent with envelopes instead of automatic weights.
Hm, it must be the mesh. I just tried a single bone, and failed in the same way. I just have no idea what the problem is.
As for tutorials, i fear i have to point to Blender tutorials here. We don’t have explicit rigging tutorials yet. But the process is the same than for parenting with automatic weights. Just that you use With Envelope Weights instead.
Select Mesh, hold down Shift, select Armature, press hotkey CTRL P (or choose parent in the Relations tab in the Tool Shelf), and choose the method that you want to use for parenting.