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Setting the permanent press button affects two parts of the washing machine. First, it reduces the agitation level during the first cycle of the machine, the wash cycle. (Have you noticed on the care label that one minus sign beneath a washing tub means permanent press while two minus signs means delicate? The minus means a reduction in agitation level. So two minus signs are more gentle than one). Second, it adds a cool-down rinse cycle after the wash. This is only a sketch of what a permanent press setting is though. I don't think there are regulations on washing machines about this though (maybe??). So the best thing would be to read up on permanent press in the manual or call the manufacturer up and ask about your model.
When should it be used? I think there's many schools of thought on it though. The care-label school of thought would say "use permanent press when the care-label says so"; this misses some nuance though. For example, just because the care label says use permanent press doesn't mean you
have to use it; you could use a more gentle cycle. And, one could put non-permanent press cloths in a permanent press washing cycle if they wanted too.
There's also the personal testimony school of thought (aka "what I've been doing for years") and this is as varied as the number of people in the world. These experiences will be influenced by the person's washing machine, clothing they've been washing, water hardness, detergents, etc. So, advice from this school of thought doesn't translate the same way for everyone.
I think the thing is this: the permanent press setting on a washing machine is designed to change the agitation level and rinse cycle temperature to preserve the integrity of clothing that has been treated as a permanent press fabric but that would otherwise be damaged in a normal cycle.