Technically CWS is an autopilot sub mode (I am talking here about Boeing/late airbus here as I can't talk about other types). It is in essence attitude hold but where the pilot can make inputs into the autopilot via the yoke. A kind of fly by wire even for a/c which have a mechanical i/p to the control surfaces.
Sensors in the yoke (called force transducers) pick up any input force that the pilot may feed into the control column and transmit the resulting electrical signal to the relevant surface actuator to deflect it to produce the desired input. When the yoke is released the autopilot maintains the attitude at which the column was released. . .It is not TCS where the pressing of a button momentarily disengages the control surface servos and them re-engages them when the button is released.
On Boeings it is selected by either a mid detent on the a/p engage paddle or a middle button on the AFCS MCP.
Of course on Airbus it is in use all the time the pilot is 'manualy' flying as it is a FBW a/c.
As for when it is used? Don't ask me, I am only an engineer!