In practice
Most sites should never use it. Google discounts obvious spam automatically, and a careless file removes links that were helping.
Reserve it for a manual action or a documented negative SEO campaign, and disavow at domain level with a record of why.
Why it matters
It is the only way to formally reject links after a manual penalty.
It is also one of the few SEO tools that can do lasting damage in the wrong hands.
Related terms