I use them when I'm getting ready for a large invasion of a province where the enemy has lots of troops. I usually have a few provinces with inns and I wait for a turn with plenty of mercenaries for hire. On that turn I hire as much as I can afford and attack. The mercs take the brunt of the enemy fire and therefore will take most of the casualties so I can keep my "home-bred" troops safe. They will also stay to take some of the casualties in sieges. After I conquer the province fully I usually disband unless the mercenarie unit(s) can still be useful.
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