Fiber Optic CWDM’s are used to increase the amount of information or systems that can be transmitted over a single fiber. They are also used to create virtual fiber or fiber relief freeing up existing fibers to be used for other networks or systems.
For example a typical 4 channel CWDM point to point network will use a multiplexer to combine four different wavelengths onto one fiber and a demultiplexer at the opposite end to individually demultiplex or separate the wavelengths. This allows you to simultaneously transmit four different signals/systems over the same fiber. This would free up 3 other fibers on a four fiber network creating virtual fiber or fiber relief.