Photoshop for screen printing is used to do color separation, print film positives, create mock ups for t-shirts and to create high resolution art. Photoshop for color separation is done using the color range tool located under Select< Color Range< and using the "eye dropper" tool to select a color, you can then select more or less of a color using the fuzziness "slider" option. Printing film positives is done best after converting each channel to a spot color and then selecting File<Print< and choosing Separation in the pop-up window. The best way to create a realistic mock up is done using a displacement map. Using this method will allow your design to follow and fold with the wrinkles of the garment.
Photoshop can also be used to help repair images supplied by customers. Many times you may be supplied low resolution .jpeg files from customers that will need to be "touched up". Using Photoshop you may be able to improve the overall file enough to print film positives and screen print the design. Otherwise you may end up needing to redraw the jpeg image or "vectorize" it in a vector software such as Adobe Illustrator or Corel Draw.