I add it as a layer when I am building up a
hugelkultur mound. Kind of like one of the sheets in a sheet mulch. If you make it one of the lower sheets, say a half-inch or so, and then use your regular clay soil on top, the action of rain falling on the clay will wash the clay particles down until they begin to coat the sand and organic matter underneath.
I think you always want to have a good bit of organic matter either mixed in with the sand, or have the sheet of sand between two layers of organic matter. That way there is less chance of the clay washing down into pure sand and then cementing the sand particles together.
Another thing to do is to add
biochar to the sand and get it good and black by mixing it up before you add the sand. This serves the same purpose; with a coating of biochar on the surface, the sand particles are less likely to get covered by little tiny sheets of clay particles, which can then cement together.