Carbon is good for removing certain organic wastes that not effectively removed by protein skimming. Chief among these are amines (fish wastes that yellow the water) and terpenes (chemical irritants released by soft corals).
If placed in an area of good flow, the carbon will adsorb organics for 48-72 hours. After that it is effectively clogged and should be discarded. Usually you can do this once a month, or gauge it by the yellowness of the water (look lengthwise through the tank at a white card). In slower flow areas, like just sitting in the sump, leave it in longer. Don't put it in so much flow that it grinds the carbon.
Make sure you get a good quality carbon! Cheap carbon will leach large amounts of phosphate. We have tested several and found Marineland Black Diamond, Kent Marine, and Two Little Fishies Hydrocarbon to all be phosphate-free (several others may be as well, but we haven't tested them). Among these, TLF Hydrocarbon is by far the most effective. The grains are looser and more porous so they adsorb at a much faster rate. When we were first testing it, we found that one dose of Hydrocarbon left in for 24 hours had the same yellow reduction as 1-1/2 weeks of Kent Marine with changes every three days.
