Use Continuous Filter, when the user does not need context (non-matching items that are filtered out) to accomplish his goal. If the goal requires comparison of the hits with the non-hits, use Continuous Highlight.
Example 1: Filter Table [Laakso00, p. 46]
Example 2: Contact cards in Nokia Communicator
Example 3: HomeFinder [Williamson92]
References
[Laakso00] Laakso S.A., User Interfaces. Lecture notes of the 581391-1 User Interfaces course, series D405, Department of Computer Science, University of Helsinki, 2000.
[Williamson92] Williamson C., Shneiderman B., The Dynamic HomeFinder: Evaluating dynamic queries in a real-estate information exploration system ACM SIGIR'92 Conf. Proc., Copenhagen, Denmark, 1992, p. 338-346.