Do u just stick it in your filter or do you use it b4 water changes? If you add soft tap water(say 6.8) into tank water softened by peat moss (say 6.5), will the combined water become even softer or will it level out in between?

I have it both ways.

1) Pre-water change, prep the water in a garbage can, enough for several small tanks or one big tank.
Run the water in, whatever blend you want (RO, tap, dechor, mineral additives...)
Add a knee-hi stocking of peat moss.
Let it sit overnight with a pump running. Especially effective if you can direct the pump flow through the peat moss.
Make sure the nylon stocking does not get into the intake of the pump.
Option: hang an aquarium heater in the water. (Good in winter, I do not bother in the summer)

By prepping the water ahead of time it matches the tank, or is just a little bit different to correct a problem in the tank.

2) Put a cut-up piece of nylon stocking in the filter with a handful of peat moss. Larger tanks, perhaps with a canister filter, might get a whole tray full of peat moss (in a loosely filled stocking so it can mold to the shape of the tray). A knee hi stocking makes 1 giant bag (for water prep), 2 medium bags (good in a canister, or large HOB) or 3 small bags (great for HOBs)

By keeping the peat moss in there all the time any tendency of the tank to drift to some other parameters is moderated so it is pretty stable.

Alright so if i added enough peat moss to my filter that the tank water is on level with the pH with my tap water, i wouldn't have to do any prep for water changes right? My only question then is, when does peat moss lose its effects to lower pH and how do i know when that happens. I dont want my fish to suddenly go into shock because the peat moss stopped working.