Quick version, the difference between "B" and "D" is in "B" the engine is used in compression braking when you release the throttle. In "D" it is not.
I think in "B" the "base rate of regen" is a little higher as well, but I could be wrong on this.

You use "B" for descending long hills to keep the car under control. Generally the Prius will coast better than most other vehicles, so when you descend a long hill you will release a lot of energy into the brakes or regeneration system. If you just use "D" and the brake to control the vehicle speed, you will quickly fully charge (to 80%) the "traction battery" and will then be using the friction brakes only to keep the speed under control. In "B" the car will use the engine to dump the excess energy (and it does so aggressively - I've seen the ICE RPM go up to 5000 on really long steep hills such as a mountain pass!). So you reduce the load on the brakes in "B". On short hills you will be "wasting" the energy by dumping it into the engine compression rather than using it for recharging the traction battery (regeneration).

Pearl is a
2007 Driftwood Pearl Prius
Package "B" (everything but leather, nav, and rear camera)