1. It is legal to use a VHF radio on your boat while underway as you are expected to keep a LOOKOUT "by sight and hearing and all available means".
2. Many Harbors would expect to keep the VHF shut off when in port, but that's changed about a decade back.
3. The basic use of a VHF is to communicate with others - vessels or land-based Authorities (as in "somebody authorized to have that radio"! and providing Marine Services).
4. Channel 16 (156.80 MHz) is the basic "CALLING FREQUENCY" and you 'need to' switch over to a "WORKING CHANNEL" as advised on the radio, once contact is established.
- If this is ignored, you will receive a reprimand from the local authorities, usually going up to the USCG. This could be a ticket from the USCG.
Ofcourse, if you are on a secluded island 50 miles from anybody, you could use your VHF as a telephone, nobody cares.
Basic prinicple being that the radio waves are free to use and if you have a license - license to Transmit and thus flood the spectrum - you are free to transmit, as long as you are not stepping on another's working. Thus the Working Channels, and the requirement for the Transmitting Station to move over to the Working Channel as soon as Radio Contact is established.
Again, this is a Working Channel, not What-You-Had-For-Lunch-Today Channel.
5. Marinas and Shipyards, and some Marine Agents, are usually allowed to use the VHF, but again it boils down to how busy the geographical region is. A place like Singapore or SF Bay Harbor will not allow use of VHF freely as mostly all channels are going to be quite busy. However, on an Oil Rig on the High Seas, different Channels may be used differently.
6. Therefore, legality is not so much to be considered here, but for the fact that you are allowed to use a piece of technology as long as you have a good reason for it. The moment USCG or another local authority finds that you are squatting on an Operational Channel (marine) that has been assigned to them (usually by USCG), you will be required to shut down. Thus the sense in licensing in most countries. Hopefully this answers your question on legality - in the US you are basically allowed to purchase a VHF and use it for the purposes it is meant for, or, you will be ticketed and shut down. (It is EASY for 'them' to hone in on your signal and catch you if they wish to!)
It's proper use is being on a 'body of water', not with one foot in a bucket half filled with water, and on a 'vessel' that needs a VHF. A canoe does not need a VHF since it is not 'expected to' go more than a mile or two away from land. "Vessels" that may find themselves many miles away from land, need to be equiped with a VHF.
Also, the body of water being navigable is again subjective - your MacGregor may easily go up and down a river (or an inland body of water, like lakes) but the Queen Elizabeth 2 would not be able to navigate in those rivers or inland waters, though both are "vessels" on a 'body' of water.
7. The correct protocol is to call the Station you are calling, repeating the name of the Called station 3 times and identifying yourslef once. Then wait 30 seconds or so for a reply. Repeat and wait. Repeat and wait longer. If they do not reply, they are either not monitoring Ch 16 (which they should be doing) or, they've gone home!! Try again for a while and then shut down without causing a nuisance!
Example:- Station ABC is trying to call Station XYZ:-
"ABC, ABC, ABC, this is, XYZ, XYZ, XYZ calling you, Over."
Pause 30 seconds or so.
Repeat "ABC, ABC, ABC, this is, XYZ calling you, Over."
Pause 30 seconds.
Repeat "ABC, ABC, ABC, this is, XYZ, XYZ, XYZ, Over."
Pause.
Do this for probably a couple of times more and then give up for a while.
Remember, since this is the "Calling Frequency", this is also the "Distress Frequency" on VHF, therefore the "littlest" use of this channel is prudent. This channel must be listened to at all times, to keep a good lookout. Also listen in on the Local Channel you've been advised to listen on, for example Channel 9 but Ch 16 is predominantly the Marine Calling Frequency.
Keep in mind that you need not get hung over with "Over", "Over and Out", "Roger" and "Ten-Four"s!! Depending on the clarity of the signal coming in (and more importantly, how your signal is being received by the other station), these may not be needed sometimes!!
Marine VHF Radio, on a good day (good set, antenna well rigged, mid day or night) will be able to transmit approx 5 miles with a 5 Watt power and approx. 50 miles with a 30 Watt power. These are FM transmissions and are half-duplex, meaning Transmit or Receive in a given time-slice. Depending on atmospheric ionization during evenings, you can get your transmission heard even 200 miles, but that is the freakish nature of radio waves.
The link given above by vizwhiz is very worthwhile.
Lastly, ALWAYS keep the radio ON and keep a listening watch on VHF Ch 16 (and the channel guided by local authorities), and understand that it is your *responsibility* to assist another vessel in Distress, and in the minimum, you should RELAY the Distress call to others if you can.
Hopefully your question was answered somewhere in the middle of this prose!