how do we use it as such?
Naturally, you surround the part(s) to be deleted with <readmore> and </readmore>, as you would see if you did "view HTML source" on that node.
How long has it been available in this enhanced form
Months. Sorry, I can't easily pin it down much more than that.
BTW, I think it would be good to make the readmore tags somehow subtly visible (without having to resort to "view source") when viewing the full node, but I haven't come across an appealing presentation for that (none have been nearly subtle enough).
Update: No, wait. I did come up with one I liked, but I had forgotten it. My idea was to provide a "Read less" link in the node header if a <readmore> is present and that would add a readless=1 CGI parameter that would trigger readmore processing even though you are looking directly at the node. Anyone game?