The lens hood should be kept on and point away from the lens at all times. It keeps unwanted light from entering the lens which often causes flare and it protects the front element from accidental knocks.

• There is no downside to having the lens hood on the right way, except for added bulk.
• Most people unfortunately use their lens hood in decoration orientation which means backwards where it provides no protection from light or knocks. The only thing it does there is interfere with focus and zoom rings. Don't do this!
• A lens hood is often not used when using a circular polarizing filter because it prevents the user from rotating the filter. Some hoods, like most Pentax ones, have a small removable window at the base to access the filter-ring.

It helps regardless of light intensity. Flare can occur at night just as it does during the day. Remember that metering balances things out. Even if light is less strong at night, you will usually expose for longer which renders frame brighter and therefore more visible.