You need to multiply when you want to modulate one color by another. For example if you have a blue material, you want to multiply the light falling on it by the color of the material because it should only reflect blue light. If you have yellow light on a blue material you'd expect to get black because blue materials won't relect yellow light. (In real life you never have materials that are this perfect, they might be (0.5 0.5, 0.75) ...
If you have two light sources for example then you'll probably add them as you want to total the contribution from each. The light you see is simply the total of both lights, so add them.