This is part of the form. It is near the beginning of the short form, after we have done cloud hands and before the section with the kicks. In long form, pat the horse high is done several times and not always followed with spread the hands.
As an application it has to be set up. You would need to enter with something like spread the hands and then pat the horse high. Pat the horse high is a very effective move. It can be used to trip or throw your opponent.
For health you are stretching or opening up then contracting or closing in. This movement is good for open and closing the chest area. The knees and arms get a good work out too.
Spreading the hands, the focus should be on the striking hand. Opening the chest area. You are coming from being small to being large.
I like these two moves because they are very effective and relatively simple to execute.
Pat the horse high must be an important move because it features often in the long form. Other styles of tai chi also have these moves in their forms.