Generally speaking, being able to split based on wavelength lets you transmit data on multiple wavelengths to increase your bandwidth. The flow is to modulate each wavelength individually, mux them together, send them through a single fiber or waveguide, and then demux them on the other side. In a switch, you could imagine switching each wavelength individually and optionally combining them into a single waveguide out of each port of the switch.

This particular device could not be used to make an interferometer. The device has 1 input (call it port 1) and 2 outputs (call them ports 2 and 3). If you input 1550 nm light to port 1, most of it goes to port 2. If you input 1310 nm light to port 1, most of it goes to port 3. This also works backwards: if you input 1550 nm light to port 2 most of it goes to port 1. If you input 1550 nm light to port 3, 10% of it goes to port 1 and the other 90% gets radiated outward as loss (crosstalk is -10 dB). So if you tried to input 1550 nm light to both ports 2 and 3 there won't be much interference at port 1 unless there is a large power imbalance between your two input beams.