I don't use it very much, but generally when I do:
a. I'm completely exasperated;
b. I'm out of control;
c. I'm saying things I'll regret later.
Typical instances of use:
1. In a nice restaurant, table full of straights next to us with 5 and 6 year old running wild through the restaurant and Mom trying to control shrieking baby, while Dad sits there oblivious talking to his "bro" or "brah" or whatever, his buddy. (Benihana's on Westheimer in Houston last Wednesday). "Goddamn breeders!"
2. In a shopping mall with friend, shopping. Straight Dad looks at us, basically snarls (and you can tell he's thinking, "Fudgepackers!"). "What are you looking at, you Goddamn breeder?"
But trust me, straight folks: (not excusing, just saying) a gay man will actually HEAR more offensive, insulting things from straight people in one year of his life than straight people will hear from gays in their entire lifetimes.
This board is (usually) a totally delightful experience, because most of the straight people on here are great (and in most cases, very atypical). If all the straights were like those on this board, the world would be a better (and, ahem, larger...had to throw it in) place.