It is commonly used to express affection and love for a woman, but can also be used to refer to a favorite object or place.
For example:
* Моя любимая книга (My favorite book)
* Моя любимая песня (My favorite song)
* Моя любимая страна (My favorite country)
In a romantic context, "lubimaya" is a very affectionate term and is often used by a man to address his girlfriend or wife.