When is it better to use multiple XML sitemaps vs one sitemap?

As far as I know you only need one site map per website. Google Webmaster only asks for one. How would multiple site maps even work since it's a file with an expected name "sitemap.xml" located in the index directory of your site.

Multiple sitemaps should only be used when your site requirements exceed the size limitations provided for a single sitemap file. For simple additions and updates in the website, you need not create an additional sitemap as search engines are able to pick up these updates when crawling your site.