Here's where you find out!
One use for this foot is to make a machine-stitched blind hem. You fold the fabric in a specific way (do a Google search on How to Sew A Blind Hem for instructions). You use a stitch that combines a zig zag and straight stitch. Then, you line up the fold of the fabric with the red plastic piece (which adjusts to the proper width by turning the little screw) so that the larger zig zag stitch stitch catches a little "bite" of the fold. This little bite makes the invisible stitches. You unfold the fabric and voila!
OK, honestly, I never use it for this purpose. I'm not clever enough to position the needle to take a consistent tiny bite into the fold, and the way to fold the fabric is way to complicated for me. Moreover, I don't sew clothes very often, and on the rare occasion I need a blind hem, I do a very nice hidden stitch by hand.
The other purpose, which I use HEAVILY is a simulated serger stitch or overlock stitch.
I use this for finishing seams on my scrub hats, and it turns out so much nicer than a zigzag or pinking cut on the raw edge. It is easier than binding over the hem or any more complicated an laborious seam finishing technique. And it looks nice and clean.
Close up of overlock finish on a scrub hat seam
First, you must choose an overlock stitch. On my Pfaff, the stitch program chart (located on the flip lid on top of the machine) has a little subscript indicating which foot to use for any given stitch.
Pfaff stitches on the stitch program chart
The "Info" button also displays this information on the LCD screen. Above, stitch 19 is a classic overlock stitch, and you could use 16 as an overlock stitch as well. Notice the subscript: stitch 18 should use presser foot 0, stitch 17 can use foot 0 or 1, etc.
My favorite overlock stitch is 21, and this is the stitch shown above on the finished seam. The stitch is shown on my guide like this:
Stitch 21 - on Pfaff 2046
They call this a "light knit fabric patching stitch." OK, fine, but I think it makes a nice overlock stitch for cotton fabric. It's not too heavy, it doesn't bunch up the fabric, and it doesn't use too much thread. I tried other stitches and this works best for this purpose.
When you compare this stitch to stitch 19 above, you notice that 19 has a "line" of stitches on each side, kind of like it's outlined on the left and right. Stitch 21 doesn't have the outline explicitly. The stitches with the outlines are "closed overlock stitches," while those that don't are "open overlock stitches."
The Magic of the Overlock Foot
The overlock foot is magical because of its tiny wire in the open area of the foot.
Top and Bottom view of Overlock Foot. Notice the wire.
When you sew an overlock stitch, you line up the raw edge of the seam with the red plastic piece. As the machine forms the stitch, the needle swings to the left and to the right (in addition to up and down, of course), and as it makes its right-most swing, it passes to the right of the wire. Then it swings back.
The thread is caught on the wire! Genius!
This holds the thread in place, out over the edge of the fabric, until the next section of the stitch is made. The next section locks the thread in place. The fabric advances with the feed dogs, and the held thread falls off the open back end of the wire.
This is how the overlock is made.
A closed overlock stitch will actually run stitches along the edge of the fabric. An open overlock stitch does not; a component of the stitch forms right at the edge of the fabric.
Your fabric determines what is the appropriate stitch - how fine your fabric is and how readily it frays.
A Third Use for the Overlock Foot
If you don't have a 1/4 inch foot, you could use this foot as a substitute. You'll have to do a little experimentation with the position of the guide and moving the needle off center to get the precise 1/4 inch seam.
Two Obvious Questions
Why would I want to finish a seam anyway? You can't see it, it's on the inside.
Finishing a seam a sign of quality workmanship. Maybe you've sewn a garment where you did not finish the seams, and after a few washes, you have a curled up mess inside. The seam allowance sheds lint and threads. No, you don't have to do it, and some applications it really isn't necessary. It's just nice to do it, particularly on clothing.
Take a look at your own purchased clothing. Are their seams finished?Why not just get a serger?
Yes, why not. Personally, I don't feel I do enough finished seams to justify the expense or the space. Perhaps if I sold more hats in my Etsy store. Truly, if you're doing lots of seam finishing, yeah, you should get a serger.