Typical usage should be on dissimilar preceding/succeeding categories, or where a large gap exists in otherwise sequential categories. For similarly named sequential categories with gaps less than 5 years, use {{Navseasoncats}} instead, and {{Navseasoncats|skip-gaps=yes}} for gaps up to 15 years from the parent.
For 2 adjacent categories, a preceding Category:NAME1, and a succeeding Category:NAME2, place:
If more than two parameters are supplied, the template is unlikely to do what the editor intended. For Category:NAME1, Category:NAME2, and Category:NAME3, for example:
{{Category pair|NAME1|NAME2|NAME3}} will ignore Category:NAME3, and
{{Category pair|NAME1|NAME2}} will ignore Category:NAME2, because a duplicate | character between the two categories causes Category:NAME2 to be the third parameter rather the second.
If neither parameter is a category which currently exists the template will produce no output. This is not necessarily an error; the other categories may simply be part of an incomplete series which will be completed in due course