Let's tackle the second part of your question first.
when/why would I want to use [a crosscut sled] over the fence on a saw?
It is extremely unsafe to use your table saw's fence for crosscuts because such a small surface is registered against the fence. It would be easy to twist the workpiece and cause a kickback, or at the very least ruin your workpiece.
So what exactly is a crosscut sled used for
As its name implies, you use a crosscut sled to make crosscuts on a table saw. But that description doesn't even begin to scratch the surface.
You use a crosscut sled to safely make perfect, repeatable crosscuts on a table saw. I say perfect because the cuts are dead-accurate without tear-out, and are extremely safe with a well-designed sled. A typical crosscut sled is fixed at 90 degrees, has a zero-clearance kerf, and provides backer support through the blade and for several inches or even feet on both sides of the blade (depending on the size of your crosscut sled and back fence.
You can also add stops and clamps to a sled to improve its versatility; for example, to cut other angles or even to rip small parts. You can also quickly crosscut many parts of the same length simply by clamping a stop block (any small scrap piece of wood) to the sled's fence. A sled can ride in a single miter slot like a miter gauge, but many designs use two miter tracks.
Because both the workpiece and the offcut move with the sled and are backed by a fence perpendicular to the blade, there is a much smaller chance of kickback than with a miter gauge, and neither the workpiece nor the offcut will have blowout as the blade exits the piece.
It's not uncommon for a woodworker to build multiple crosscut sleds for different purposes--for example, one for large parts, one for small parts, and perhaps if you make boxes, one for cutting the sides of a mitered box with the blade tilted 45 degrees.
Although you cannot use a blade guard with most crosscut sled designs, you can and should still use your riving knife. Some designs include polycarbonate guards integrated into the miter sled, and many designs include features which ensure your hands remain far away from the saw blade, such as designated hand holds or a windowed box that fully encloses the blade as it exits the back fence.
The crosscut sled's cousin is the miter sled, which similarly makes perfect miter cuts. It's easy to adapt a crosscut sled to a miter sled with the addition of some hold-down clamps, stop blocks, and a scrap piece of wood cut to the exact angle of your miter joint.