5standing still is the whole item
This drops from Golem on Expert and above, so it arrives late and it arrives as a reward for a fight you already had to win. Stop moving, stop using anything, and go a moment without being hit, and your natural healing starts climbing well past its normal ceiling. Topping out takes long enough that you will usually be back to full before it gets there, so the part that matters in practice is the first several seconds.
Movement does not throw that progress away. It only caps how high the rate is allowed to sit while you are moving, and creeping along slowly still counts as standing still. Taking damage is what wipes it, and Bleeding wipes it over and over, which is why that debuff is worse than usual while you are wearing this.
what counts as an interruption
Quick heal, quick buff and quick mana are all free. Reaching into your inventory and clicking the same potion is not, and it cuts the healing off. Sitting on a mount, riding a minecart and hanging from a grapple all count as staying put, and so does traveling by teleporter. If an attack is coming while you are recovering, move out of the way instead of eating it: movement only slows the buildup, while a hit sends you back to nothing.
the part that never switches off
A slice of the healing bonus applies no matter what you are doing, including while sprinting and swinging, so the accessory is never doing literally nothing. It also blunts damage over time debuffs whether you are moving or not, which quietly makes poison, burning and the rest less of a tax across a whole run.
making it work during a fight
The obvious read is that this is dead weight in combat, and for a normal attacking build it is. It becomes real when your damage comes from something other than a button press. Minions and sentries qualify. So do the Nimbus Rod, the Clinger Staff, a Magnet Sphere, a Spore Sac, and armor that punishes attackers on its own. None of that registers as using an item, so enemies die while your healing keeps building.
Two more things leave it running. Keeping a shield up, either the Brand of the Inferno or a Sergeant United Shield, adds defense without stopping the regeneration, though the moment you raise it does interrupt. Dodges from the Brain of Confusion, Tabi or Master Ninja Gear also leave it alone. Longer invulnerability from a Cross Necklace or Star Veil stretches the gap between hits far enough that the stone gets going again between them, which is what makes standing and tanking viable at all. In multiplayer that turns into a job: one player parks in the open absorbing hits while everyone else moves freely.
the cheap alternative to the nurse
After a respawn, between boss attempts, and between waves of the Old One's Army it saves you both potions and money. The Nurse is far quicker when you can reach her, so this is for the times you cannot, or when you would rather keep the gold.
on expert and above
Going without a Well Fed buff in Expert cuts the healing effect by a quarter, so food you were probably already carrying is worth more here than anywhere else. The flat portion of the regeneration is unaffected either way, and other regeneration boosts stack on top, so a campfire and a heart lantern near your arena are still doing their job while you sit.
trivia
The art is a nod to the Ankh Jewel from La-Mulana.