I am using the Taxonomy Field on a custom post type in order to create a radio button set used to apply a single Taxonomy to this post type. Each post of this type must only have a single taxonomy applied to it.
Based on what Taxonomy is applied to the post, other fields will appear. This setup is being used to make sidebar offers for a site. So one offer type is a video widget. So if you choose Video Widget, then certain fields will appear (title, youtube video url, ect). And if you choose eBook Download Widget a file upload field will appear instead.
When I use the Checkbox or Multi Select options from the Taxonomy Field, the custom fields will appear on the fly. The post does not need to be saved for the fields to appear. But if I use the Radio Button (desired option) or Select option, I have to save the post before the custom fields will appear.