Why: The constant hazard rate, l, is usually a result of combining many failure rates into a single number.
When: The exponential distribution is frequently used for reliability calculations as a first cut based on it's simplicity to generate the first estimate of reliability when more details failure modes are not described.
Where: In electronic systems (which can have many different types of failure modes and the fact that any electrical/electronic system is an amalgam of many different components) the simple assumption is that the electrical/electronic package will have a constant failure rate system defined by the exponential distribution. When in doubt about the failure mechanisms, it is common to assume use of the exponential distribution with it's constant failure rate for simplicity.
These definitions are written by H. Paul Barringer and are also posted on his web site at www.barringer1.com