What is the purpose of pressure differential and where we install in chilled water piping?

pressure switch is between the pump supply and return by1/4"Copper pipe...if the pressure difference between the suction and discharge increase than a limit it turn of the pipe, 

Pressure differential can be used in number of ways

from suction to discharge of pump or fan to check that it is running.

Between suction and discharge header to check the required pressure have been maintained or not.

also on the chiller suction and discharge to check water is there or chiller will not operate.

the differential pressure transmitter(DPT) can be used in3 location,you can install in return,between return and the supply,and most and proper location to installed this DPT and DPSHL is on the supply to monitor and to check the pressure have been maintained or not.and the purpose of this devices is to control the pressure,or maintain the proper pressure to prevent minor or major damages of water pipe and or the air duct.