Hi,
you can apply the simplification whenever you want. It is a generic algorithm that is not closely related to maps, it just simplifies polygon shapes, so you can apply it at any time. There's no an algorithm for selecting a tolerance parameter, because it depends on you map's data and the goals of your project, so our advice is to experiment until you are pleased with the results.
Note that for now the simplification acts on polygons only, so it is recommended to use it only on single shapes that are not connected to others such as islands or continents shoreline.