The main method of use is by being detonated by shooting it, this can cause the players position to be given away if the sound is not masked.
In Sniper Elite III it can be placed on a timer by using the Flint and Steel allowing players to conceal their position, while also causing massive damage. The fire may also attract guards to the position before detonating it.
Sniper Elite V2 Edit
A dynamite charge which create a devastating explosion can be remotely detonated by sniping. It can be useful for setting traps for enemy squads or destroying vehicles.