The words therefore means approximately ‘as a result’. It also has a formal meaning in mathematics. It should generally be used when a conclusion is clear or unarguable (or if you’d like to make your conclusion appear that way).

In the eyes of employers, this potential is valuable and therefore compensated through the wage.

The inhabitants of the new world are men who have been “unsexed by failure” (Mead 318) and therefore do not exist except as “ghosts, breathing dreams like air” (154).

Note that therefore cannot function alone as a conjunjunction joining two independent clauses (in these examples, “and” is the conjunction).