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Normally product on belts is only stacked 1 high, the automatic piler will stack material on the belt (the max being 4 high), thus giving more space on the belt for other product. So for example a mark 3 belts sends 30 items a second that are stacked 1 high, going though the piler you would have 15 per second 2 stack high sets of items. With space in between to bring in another pilers via a t-join'ed belt or splitter to have 60 items per second.
At max stacks of 4, it means you could in theory have a mark 3 belt moving 120 items per second.
A common example of this is in fractionater loops, where you might have the piler before the hydrogen input loop. Since it will stack existing material on the belt, freeing up space for incoming material. Thus increasing the fractionator input.
Note: It does loose its use late game where there is a white cube research tech that allows logistics stations to output stacked materials to belts.
I use these often in my blueprints - so not exactly useless.
1) they arrive adjacent to each other on the belt. If you're filling the belt so slowly that there are 1 or more empty spots between items then the piler won't do anything. It doesn't buffer items internally until it has a stack.
2) the items are the same. It'll happily stack two iron ingots atop each other, but if you're running a mixed belt it will never stack, say, copper atop iron. So even if you had a full belt but it always alternated iron and copper the piler would still do nothing.
(And as noted earlier, it is directional. To stack you need to put the unstacked input into the lower side of the piler, and the belt for the (potentially) stacked output will come from the taller side. If (for some reason) you wanted to unstack a belt then the stacked input would go into the tall side and the less stacked output belt would come from the lower side.)