You should use inline when you need to define a function that must have its type (re)evaluated at the site of each usage, as opposed to a normal function, which will have its type evaluated (inferred) only at the site of first usage, and then be regarded as being statically typed with that first inferred type signature everywhere else thereafter.
In the inline case, the function definition is effectively generic/ polymorphic, whereas in the normal (none-inline) case, the function is statically (and often implicitly) typed.
So, if you use inline, the following code:
let inline add a b = a + b
[<EntryPoint>]
let main args =
let one = 1
let two = 2
let three = add one two
// here add has been compiled to take 2 ints and return an int
let dog = "dog"
let cat = "cat"
let dogcat = add dog cat
// here add has been compiled to take 2 strings and return a string
printfn "%i" three
printfn "%s" dogcat
0
will compile, build and run to produce the following output:
3
dogcat
In other words, the same add function definition has been used to produce both a function that adds two integers, and a function that concatenates two strings (in fact the underlying operator overloading on + is also achieved under the hood using inline).
Whereas this code, identical except that the add function is no longer declared inline:
let add a b = a + b
[<EntryPoint>]
let main args =
let one = 1
let two = 2
let three = add one two
// here add has been compiled to take 2 ints and return an int
let dog = "dog"
let cat = "cat"
let dogcat = add dog cat
// since add was not declared inline, it cannot be recompiled
// and so we now have a type mismatch here
printfn "%i" three
printfn "%s" dogcat
0
will NOT compile, failing with this complaint:
let dogcat = add dog cat
^^^ - This expression was expected to have type int
but instead has type string
A good example of where using inline is appropriate, is when you want to define a high order function (HOF, i.e. a function taking (other) functions as arguments), e.g. a generic function to reverse the order of the application of arguments of a function with 2 arguments, e.g.
let inline flip f x y = f y x
as is done in the answer from @pad to this question Different argument order for getting N-th element of Array, List or Seq.