It works on your ticks of Affliction, Crushing Darkness, and Creeping terror. It does NOT work on Force Lightning which is channeled, not a DOT.

Something like this will do quite nicely. Do the madness side first as you level up. http://www.torhead.com/skill-calc#201ZbsrMdRMuzZcMcRs0z.1

A hybrid between lightning and madness seems to be the way to go right now. It gives you the maximum amount of force sustainability and gives you both massive damage with the best talents from both trees.

It adds 2 more ticks of damage. Let's say a dot did 1000 damage over 10 ticks. This talent makes it do 1200 damage over 12 ticks. The language is pretty clear. I'm not sure why people are having trouble understanding this. This increases your overall damage in a couple of ways. One, the spell becomes more efficient in that it is doing more damage for the same amount of force. Two, it now has to be recast less which saved you force and casting time. Three, it gives you more time to apply other effects. These talents should always be taken. There is a similar one for affliction in the lightning tree and it does the same thing.