Sorry Falanor, I totally missed this thread.
When to apply it is totally up to you, as the Creature Creator.
Use it for creatures that you think would be tougher and do more damage based on their density-- I think a Xorn would be the classic example, or maybe an Aurumvorax (if you get that reference).
The purpose of changing that modifier is to allow a creature to do more damage with its natural attacks without necessarily changing its size or Strength. (You could, of course, do the exact same thing by just cranking the dice up manually.)