As far as I'm aware it is always used for penalty encroachment?
It's always used for gk encroachment (with the law 14 exception of the shot missing the goal). It's only used for the other players when that player then impacts play.
So it creates a weird situation where the attacker encroached and can only be punished via VAR since he got to the ball and scored. But then the defender who encroached that normally wouldn't be punished since they didn't get to the ball is now punished because someone else met the standard?
And then we never punish encroachment on a successful pk and var wouldn't get involved because they can't.
I don't know what the solution is but VAR and PK encroachment has a lot of issues IMO.