These pastes are much much thicker than the liquid food colouring you buy in the supermarket, about as thick as toothpaste. You add them to your buttercream using a toothpick and slowly adding it a small amount at a time until you build up the colour you want. You can mix colours to create the exact tone you need. If you are colouring red or black you can buy Black extra or Red extra which are concentrated so you don't have to use as much to get intense colour.
I find it works really well for buttercream and you can colour large amounts really easily. But if you are colouring fondant with a very deep colour i recommend you buy ready coloured fondant or use a powdered pigment colour as the paste tends to make the fondant wet and sticky if you use too much.