When do we use the data loader in Salesforce?

Based on the records count  , Dataloader will be used

Dataloader is an application for Bulk import or export of data

In which cases it will be used?(Below are the answers)

1.If your requirement is to insert more than 50,000 then in such cases dataloader will be used. (Maximum 5million records it will be allowed)

2.If you want to export your data for backup purpose it will be used

3.It will be helpful in scheduling regular data loads such as nightly imports

The data loader allows you to insert, update, upsert and delete data. What is upserting you ask? Upsert is a combination of updating and inserting. It means that if a record in your file matches an existing record in your CRM the existing record will be updated with the information that the file contains, if there is no existing record a new record will be created. In other words this means you can add new records or modify or delete existing records. Once you start using the data loader you can define which of these operations you want to perform.

If you need to load more than 5 million records, we recommend you work with a Salesforce partner or visit the AppExchangefor a suitable partner product.
You need to load into an object that is not yet supported by the import wizards.
You want to schedule regular data loads, such as nightly imports.
You want to export your data for backup purposes.

You need to load 50,000 to 5,000,000 records. Data Loader is supported for loads of up to 5 million records. If you need to load more than 5 million records, we recommend you work with a Salesforce partner or visit the AppExchangefor a suitable partner product.
You need to load into an object that is not yet supported by the import wizards.
You want to schedule regular data loads, such as nightly imports.
You want to export your data for backup purposes.

hope this helps