I always find myself with customers who want drop-down menus because 'they are used to them'. So I started to wonder: When are drop-down menus actually necessary?
Please ignore the first part of the answer, I was referring to drop-down lists instead of menus. Update below.
- Long lists use very little space (de-clutter interface)
- The list is scaleable (you can add more items later if need without any GUI change)
- Keyboard can be used to access items (very useful for advanced users)
- It's a very common element (doesn't cause any problems for most users)
- You can't see the content without interaction (clicking). This means it should never be used for navigation purpose.
- If the items don't have a logical order, dropdowns are a pain to use (items should be A-Z or numerical)
That's all what comes to my mind at the moment. Any additions?
Update: As mentioned in the comments, I've misread the question and was referring to drop-down lists instead of menus. So here's my new answer:
Drop-down menus, especially "mega drop-downs" work very well when used correctly. Here's everything you need to know about this pattern - written by Mr. Nielsen himself: Mega Drop-Down Navigation Menus Work Well. And here's an article on what you shouldn't do, again by Jakob Nielsen: Mega-Menus Gone Wrong
One more thing you should keep in mind: Drop-down menus can be very tricky (or if done wrong impossible) to use on mobile browsers (no mouse over state). So make sure you test it on mobile browsers or provide an mobile version.
They are a great solution for displaying several options, but only taking up a minimal amount of space once the choice has been made. For example, a list of countries. Certainly you could list them all out in a list box or something, but it would take up an large amount space that could be used more efficiently. Then also help to de-clutter the interface.