Yesterday I blogged about when to use magic in AD&D.
What about GURPS Dungeon Fantasy?
Here is a basic overview which might prove helpful to newer players or provoke some thought in vets.
When to use spells in GURPS
Spells in GURPS have a major advantage - you can use them quite freely. You're not limited by a number of spells you can cast, but only by your skill - which limits the spells you can keep active - and your energy.
Since your energy can be recovered during rest - or by drinking paut, or by time alone (for an Energy Reserve), there really isn't a useful maximum on spells. Spells tend to be more limited in effect than in limited-spell-use systems, but can be very effective for all of that. They tend to last effectively longer, too - 60 combat turns is a common. It's vastly easier to buff combatants than to weaken or kill foes, and much easier to reshape the battlefield with area-effect magic than to directly affect enemies on it.
Potions have longer effects - an hour is typical.
In other words, spellcasters tend to use magic often and steadily throughout all situations. If you have a spell that can solve a problem, you can generally use it to always solve that problem, over and over. There is rarely a need to restrain yourself - given Levitation, climbing is only for those skilled at climbing. Given Shape Earth, digging is only for cases where the hole isn't in earth. Given Silence, you never need to risk noise unless you don't care to conceal your noisy door-bashing and gate-spiking. Spells like Explosive Fireball or Great Haste or Invisibility can be used repeatedly, during the same fight, and every fight - you can essentially depend on magical fire support or magical buffing as long as your mage is conscious. Energy limitations might cut how much of an effect, but for DF-level wizards, it's rare to be unable to cast a spell at all.
Only high individual costs or time constraints practically limit the utility use of magic. The only real barrier is cost to maintain - which may add up for big spells - and spells "on" penalties, which may increase the chance of a critical failure. Even then, often wizards have a greater net chance of a critical success than a failure. Cast away!
When to use magical healing
In GURPS DF, healing is generally best done as early as possible. Unlike offensive spells, healing spells are uniformly powerful. It's much harder to kill with magic alone in GURPS than to heal with magic alone. And the magic needed to slay a foe is costly and unreliable, while that to heal one is relatively inexpensive and reliable. For true nicks and scratches - wounds that are below a single maximum healing from Minor Healing - it's generally worth leaving them alone unless further combat is not expected. In that case, heal up quickly.
For heavier wounds, it's best done as early as possible.
Since healing results change with HP, it's tempting to knock off a few points with a lower-energy casting, but more valuable to hold it until later. A knight with 20 HP - easy for a starting character - can be healed 16 HP for 4 energy base cost with Major Healing. You're better off waiting until the knight takes a nasty, heavy blow and then heal it on the spot. Healing is fast, it's easily done in combat, and you can do it repeatedly.
(Editing later: in combat, of course, wounds that cause crippling, threaten unconsciousness, or reduce Move and Dodge should be healed immediately - doing so can be disproportionally valuable even if they don't really maximize the healing-to-cost of doing so.)
Healing suffers from a cumulative -3 for repeated castings, but DF delvers are highly skilled - your basic cleric will have 15+ in most spells, and getting to 19-20+ in all of them is easily done. So casting at a 15, 12, 9 isn't a problem - or 20, 17, 14, 11. Each spell has its own cascade, so get 2-3 different spells going (Minor Healing, Major Healing, Great Heal), plus healing potions (no penalty cascade) and Faith Healing, on top of difficulty in dying, and that 20 HP knight takes far more than 120 HP of injury to kill for sure. A bad roll can kill you, but it's hard to go down and stay down.
Between fights, getting everyone to full just requires time - a few seconds to cast, minutes to recover energy through rest. That can be sped up with cash by purchasing paut and using it. Given a relatively short time, you can heal up almost anything. Given more than 24 hours and you should generally be able to take anyone from nearly automatically dead to fine. Recovery doesn't really require rest with a PC-class cleric. It's a rare case where you need to "ration" spells between characters.
Essentially, healing should allow you to recover quickly from any fight you can win. Only broken limbs and dismemberments really slow you down - and not even then, given sufficient energy, not even then.