When should I use TOR?

Tor isn't really a security layer. If you're using a banking site, for instance, you should be connecting directly to that banking site. The connection is SSL encrypted so no one can intercept the packets.

Tor is designed for doing things you're "not supposed to"... and not necessarily in a bad way. It's mainly designed to help those who live under a repressive government be able to browse sites and post online without being arrested. It's also used by those that wish to post/surf anonymously to sites that may be socially unacceptable (although completely legal). But it's also used by folks to trade in things like child porn, deface wikipedia articles and spam websites. It's a tool designed to provide a certain level of anonymity (though certainly not ironclad) and can be used in good and bad ways.

Realistically, it is not designed for everyday browsing and most people who use it in that way don't need it. You're usually quite fine just clearing your cookies and flash data objects. You can set Firefox to do the former on every exit. And you can disable FDOs at the Adobe site... or just use FlashBlock.