Sequestrant is any of several chemicals that bind to metal ions dissolved in the water and prevent them from depositing as stains. All sequestrants break down slowly over time, so you need to add more at regular intervals to replace the portion that has broken down.[1]
A metal sequestrant holds onto metals to prevent them from staining pool surfaces. It's only needed if you've got metals (iron, copper, manganese) in your water, such as sometimes occurs in well water.[2]
There is no point in using sequestrants day to day unless you know you have metal problems. The only time sequestrant is worth using as a general protection is when fresh plaster is applied, as metal stains on brand new plaster can never be removed.
Sequestrants based on HEDP, phosphonic acid, or phosphonic acid derivatives are the most effective. ProTeam's Metal Magic and Jack's Magic The Pink Stuff (regular), The Blue Stuff (fresh plaster), and The Purple Stuff (salt) are some of the top sequestrants. You can also find many other brands with similar active ingredients, some of which are noticeably less expensive.
Most sequestrants are HEDP based. Over time the sequestrant breaks down from chlorine exposure into phosphates (it does this no matter what) and that's why you need maintenance dosing. With extended use of HEDP, phosphates will build up in the water. High PO4 levels make it quicker and easier for algae to form if the FC goes below minimum recommended levels. So, with extensive use of sequestrants, you must be mindful to keep your FC/CYA ratio properly maintained as high phosphate water is more reactive to algae than low phosphate water.[3]
Long term usage of sequestrants can effect water chemistry as discussed in this post.