My recommendation is that you use it, sparingly, with a person of the opposite gender which you are attracted to, or already dating (for example). It should be used sparingly because he/she may not get it and may ensue egopatriotic attitudes against you for your multicultural behavior.
1. the person is a small child, ie, younger sibling or friends sibling
2. the person is cute, usually younger, usually a girl
3. can be used on pet cats, dogs, etc..
-chan is mostly used by those in the anime community in america. chan is not often used unless you are familiar with that person and they are younger then you, or they are someone you are familiar with's younger sibling. since chan can mean cute, some boys looking to be manly may be a bit offended by it. also, it should be noted that the suffix chan is used mostly among friends. you wouldnt greet a freshman you dont know as chan, but perhaps as <their name>-kohai. (kohai meaning something along the lines of lower classman)
2. look at Felicia-chan's cute dress ^-^
3. Here comes Kitty-chan! What fluffy paws she has!
Their characteristic features are anonymous posting, content being quickly deleted once it becomes old, "sage"-ing, and an idiosyncratic and strange culture.
"Widdo C-chan, so kawaii!"