Cautery pencils, also known as electrosurgical pencils, are used in electrosurgery procedures to cut and coagulate tissue during surgical operations. They utilize radio frequency alternating current to precisely cut tissue and control bleeding by sealing off small blood vessels. 

Cutting:

Cautery pencils can be used to make incisions in tissue, especially useful in surgeries where precision is needed like plastic or ophthalmic surgery.

Coagulation:

They can seal off small blood vessels to prevent bleeding during procedures, improving visibility for the surgeon.

Dissection:

Cautery pencils can be used to separate tissues and create surgical planes.

Cauterization:

They can be used to destroy or burn tissue, often to stop bleeding or remove abnormal tissue like warts.