An action that was in progress when another action interrupted it
We use the past continuous tense for the action that was in progress (longer action) and the past simple tense for the action that interrupted it (shorter action).
She was driving home when she felt pain in her stomach.
When you called last night, I was sleeping.
They were walking in the park when the storm started.
Two actions that were in progress at the same time in the past
We use the past continuous tense for both actions.
I was helping my son with his homework while my husband was fixing the TV.
While I was washing the car, the children were playing.
She was reading the newspaper while her daughter was drawing.
Story setting
The past continuous tense is used to give background information to describe a story setting.
Last night, my grandmother was sitting on her purple sofa. She was knitting and listening to her favorite music. I was looking at the snow through the window.
Non-continuous verbs
A group of verbs that describe the state of the subject are always used in simple tenses. They are not used in continuous tenses because continuous verbs describe actions that have a duration (beginning, progress and end), which does not apply to state verbs.
Stative verbs are used in simple tenses to express current time.
Examples of these verbs are verbs of senses (see, smell, taste, etc.), verbs of opinion (believe, consider, think, etc.), verbs of mental state (forget, imagine, know, etc.), verbs of emotions and desires (like, love, prefer, etc.).
For a list of the most common state verbs with examples, check Stative Verbs.