We use it only when the offense is serious enough that, if ignored, it would seem about to create a referral, but it hasn't yet crossed that line. In a well-planned and implemented program, most disputants will come up with workable settlements. That doesn't mean perfect. It means that the disputants felt that the process was fair and reasonable, and that the solutions work for them. Some schools allow the option of mediation between adults and students when both parties are willing, and when the issue at hand is not a serious breach of school policy.
Some schools offer mediation for students who've been in fights as a possible trade-off.
Such a policy may also require a parent meeting. Anything illegal, e.g., weapons, drugs, vandalism, sexual harassment or abuse, etc. More concretely, students can avoid punishment for relatively small problems. More positively, it helps them realize that they really can do something significant about problems they have with other people. Teachers and administrators can spend more time teaching their lessons or dealing with other more pressing issues.