Cross-Correlation : Comparing two signals or finding the location of a target
Your example would be more illuminating for you if you did this:

x(l)={1,2,1,1}

y(l)={0,0,0,0,0,0,0,1,2,1,1}

The peak of the crosscorrelation would then tell you how far into y(1) the contents of x(1) are.  If x(1) represents a radar pulse, then y(1) represents the received reflection.  The peak of the cross correlation then tells you how long it took for the reflection to return.  This tells you how far away the obect that reflected your signal - you then know where that object is.

Cross correlating also tells you how similar two signals are.  The higher the peak, the more the two signals are alike.

Try these to see what I mean:

These have a relatively low peak

x(l)={1,2,0,0}

y(l)={0,1,1,1}

compared to this next set which has a relatively high peak:

x(l)={1,2,0,0}

y(l)={1,2,0,0}