Thanks to andre's comment (where this link is provided), I now see the effect of those delimiters. When with Mathematica 5 or earlier I add 2 newlines to the box representation of the cell:
Cell[BoxData["\"\<a
bc\>\""], "Input",
CellChangeTimes->{{3.662918813714031*^9, 3.6629188530623317`*^9}}]
and switch back using Shift+Ctrl+E, then the cell look like this:
"a
bc"
But if I remove those delimiters:
Cell[BoxData["\"a
bc\""], "Input",
CellChangeTimes->{{3.662918813714031*^9, 3.6629188530623317`*^9}}]
and switch back, then the cell looks like this:
"a bc"
It seems that the purpose of \<,\> is to delimit ranges within string literals in raw box representations of cells where newlines should be exactly preserved. It looks like they only have effect in that context and are ignored in normal input in recent versions of Mathematica.
Update: I found an old discussion on this topic: [1],[2],[3].
