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When should a far pointer be used?

Sometimes you can get away with using a small memory model in most of a given program. There might be just a few things that don't fit in your small data and code segments.

When that happens, you can use explicit far pointers and function declarations to get at the rest of memory.
A  far function can be outside the 64KB segment most functions are shoehorned into for a small-code model.
(Often, libraries are declared explicitly far, so they'll work no matter what code model the program uses.)

A  far pointer can refer to information outside the 64KB data segment. Typically, such pointers are used with
farmalloc() and such, to manage a heap separate from where all the rest of the data lives.

If you use a small-data, large-code model, you should explicitly make your function pointers far.