The following compares two files with diff using process substitution instead of creating temporary files.

diff <(curl http://www.example.com/page1) <(curl http://www.example.com/page2)

This feeds a while loop with the output of a grep command:

while IFS=":" read -r user _
do
    # "$user" holds the username in /etc/passwd
done < <(grep "hello" /etc/passwd)

It is well known that you cannot use the same file for input and ouput in the same command. For instance,

$ cat header.txt body.txt >body.txt

doesn’t do what you want. By the time cat reads body.txt, it has already been truncated by the redirection and it is empty. The final result will be that body.txt will hold the contents of header.txt only.

One might think to avoid this with process substitution, that is, that the command

$ cat header.txt <(cat body.txt) > body.txt

will force the original contents of body.txt to be somehow saved in some buffer somewhere before the file is truncated by the redirection. It doesn’t work. The cat in parentheses begins reading the file only after all file descriptors have been set up, just like the outer one. There is no point in trying to use process substitution in this case.

The only way to prepend a file to another file is to create an intermediate one:

$ cat header.txt body.txt >body.txt.new
$ mv body.txt.new body.txt

which is what sed or perl or similar programs do under the carpet when called with an edit-in-place option (usually -i).

This counts the number of lines in a big file with wc -l while simultaneously compressing it with gzip. Both run concurrently.

tee >(wc -l >&2) < bigfile | gzip > bigfile.gz

Normally tee writes its input to one or more files (and stdout). We can write to commands instead of files with tee >(command).

Here the command wc -l >&2 counts the lines read from tee (which in turn is reading from bigfile). (The line count is sent to stderr (>&2) to avoid mixing with the input to gzip.) The stdout of tee is simultaneously fed into gzip.

One major aspect of process substitution is that it lets us avoid usage of a sub-shell when piping commands from the shell.

This can be demonstrated with a simple example below. I have the following files in my current folder:

$ find . -maxdepth 1 -type f -print
foo bar zoo foobar foozoo barzoo 

If I pipe to a while/read loop that increments a counter as follows:

count=0
find . -maxdepth 1 -type f -print | while IFS= read -r _; do
    ((count++))
done

$count now does not contain 6, because it was modified in the sub-shell context. Any of the commands shown below are run in a sub-shell context and the scope of the variables used within are lost after the sub-shell terminates.

command &
command | command 
( command )

Process substitution will solve the problem by avoiding use the of pipe | operator as in

count=0
while IFS= read -r _; do
    ((count++))
done < <(find . -maxdepth 1 -type f -print)

This will retain the count variable value as no sub-shells are invoked.

Remarks

Process substitution is a form of redirection where the input or output of a process (some sequence of commands) appear as a temporary file.