Job references

Got a question for you all that had done internships/co-op at firms. I hear all of you saying you have good references from your employers and such once you were done your internships- what does that mean and how do you use them?

Do you ask for a formal letter stating how valuable you were, how you contributed, your strengths and stuff WHEN you leave the company and you keep it and bring it up in your next interviews?

My question would be WHEN do you get them, HOW you actually use them to leverage (like do you actually show them to your prospective employers during interviews), or you only show it to them when they ask if you have good references post interview, at which point you'll provide them?

I've always had the conception that when asked to provide references, it is then you reach out to your previous employers and ask them to help you write them... please correct me if i'm wrong. thanks

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