I work at Automated Insights (automatedinsights.com) and ever since I've been there, we've had this policy. The idea is to just not abuse it. Use it when you need it and don't go on last-minute 3 day weekend vacations. Most people go on a week-long vacation once a year (usually during the Summer) and people are able to take days off for personal reasons as long as it doesn't become a habit. Everyone does a good job I think.
I agree. Last minute 3 day vacations is actually OK around my workplace, and we have a limited number of vacation days.
First you ask yourself if you have critical work to do those days. If not, you're good. Otherwise, you may have to get it done sooner. Then you ask your coworker if they're going to be around to cover for you. If they are, cool, you've just scheduled yourself out of office. Set up your OOO notification and update your calendar. If not, check with your manager to make sure it's ok for both of you to be out. Generally this may mean a concession that you have to carry your laptop or phone in case stuff goes down. Congratulations, you've now scheduled your vacation.
The only time our manager really gets involved is during Nov/Dec for the holidays when people run into "use it or lose it", so he'll informally let us carry over to January or so, just so that everyone isn't rushing to take at the same time and leaving us without anyone in the office. The other time is when you want to take multiweek vacations, just so he's aware and can get coverage information.
Even then, half the company is in the same situation so it's normally pretty dead in Dec.