Why not simply use If/Then?
Its a difference of philosophy.  IF/THEN covers when a power can be used. Limitation would cover how a power can be used.  In another sense, IF/THEN is an inclusive flaw, stating that "If a condition is present, Then I may use my power".  Limitation in contrast is an exclusive flaw, stating that "when a condition is present, then it will not work."
 
Example:
Melissa the queen of the Atlantis has water themed powers.  She must be wet for her powers to work.  For this reason she carries around a bucket of water.
Electrigo the shocking has electricity themed powers, which work most of the time.  The exception is when he has been drenched in water or equivalent, and then NO MATTER WHAT, until he becomes dry his powers won't work.  This makes him a lot more cautions around pools, understandably.
 
Wouldn't this be covered by Allergy?
Absolutely not.  Allergy, as printed, when in the presence of a substance, "incapacitates, kills, or drains the willpower of" the talent with the Allergy.  Limitation does none of those things.  It merely disables the miracles of a talent.
 
Perfect Example: SUPERMAN
Superman has an allergy to Kryptonite.  When he is in the presence of it, it incapacitates him, and if left alone with it long enough, it may even kill him (I am not certain on this, as he has had amounts of it around for long hours and still hasn't died, so it may merely incapacitate him.
In contrast, he loses his abilities when doused in the radiation from a Red Sun.  It has been shown that he can live a normal, productive, and long life under the radiation of a Red Sun as a normal human (yes I realize he's an alien but you get the point).  It does not otherwise inhibit his ability to live, just his powers.
 
How would this be useful? Why use this at all?
To demonstrate an unnamed limit to the power, which would otherwise be able to do more.  For instance Psychic Artifact with limitation would represent the fact that the talent can only use their power to make a psychic sword.  Without this, the fact the talent used only a psychic sword was because of preference, even if for the sake of roleplaying the player would never use that power for anything else.  As far as the system is concerned however, there is no reason why the talent couldn't use the power to its full extent.  With Limitation, the player can define a boundary for their talent's power and be afforded the reduced cost that goes along with that boundary.
 
More Examples:
Absorption that can't absorb X-ray attacks.
Alternate form that can't change when lead is around.
Detect that stops working near radar dishes (radio signals).
Harm ice that is useless when there is an open flame nearby.
Heal that can't heal bullet wounds.
Etc.
 
You can see how this could applied to a wide range of powers.  Of course it can't be applied to all of them but neither can most other flaws.  Just like you wouldn't apply this flaw to Control or Create, neither would you apply Always On to Regeneration.  Like in many things in Wild Talents this flaw requires a little GM arbitration at times, but what doesn't?
 
Mechanics
This is where this flaw, as I envision, takes a slight departure from other flaws.  On the one hand, it could be a blanket die cost reducer like most flaws (or point per level reducer).  However I think that due to the variable nature that can be applied to this flaw, I think a sliding scale is applicable.  Also unlike most of such scales present in WT, this one is a reverse scale.  The more common the condition that shuts off the power, the more the cost is reduced.
 
For obvious reasons lest skip the Universal cost.  If something Universally doesn't work, why have it?  Also Common will be skipped, as I think that one can define a common power malfunction in terms of IF/THEN as accurately as one does with this power.  If your power doesn't work in the dark, then why not say it only works in the light? Same difference, only your won't be getting something for nothing there.  Also, if you think about, the probability a talent would run into a common condition/substance is about 50%.  If that helps, that's the benchmark where we can start accurately measuring the flaw.
 
Frequent (electricity, magnetism, a certain color [but not a certain shade])    -4/8/16
Uncommon (organic substances, metals, 1 day of the week)                         -3/6/12
Rare (radiation, magic, Divine beings)                                                          -2/4/8
A particular creature, element, or phenomenon (iron, X-rays, chocolate)           -1/2/4

Hopefully this will be helpful in the future creation of Wild Talents characters.