I am trying to figure out the differences between the datetime and time modules, and what each should be used for.

I know that datetime provides both dates and time. What is the use of the time module?

Examples would be appreciated and differences concerning timezones would especially be of interest.

the time module is principally for working with unix time stamps; expressed as a floating point number taken to be seconds since the unix epoch. the datetime module can support many of the same operations, but provides a more object oriented set of types, and also has some limited support for time zones.

The time module can be used when you just need the time of a particular record - like lets say you have a seperate table/file for the transactions for each day, then you would just need the time.
However the time datatype is usually used to store the time difference between 2 points of time.

This can also be done using datetime, but if we are only dealing with time for a particular day, then time module can be used.

Datetime is used to store a particular data and time for a record. Like in a rental agency. The due date would be a datetime datatype.

If you are interested in timezones, you should consider the use of pytz.

Stick to time to prevent DST ambiguity.

Personally, I prefer to use only the system time module in order to prevent ambiguity issues with daylight savings time (DST).

Conversion to any time format including local time from there is pretty easy:

import time
t = time.time()
t_str = time.strftime('%Y-%m-%d %H:%M %Z', time.localtime(t))

If the system additionally runs the network time protocol (NTP) dæmon, one ends up with a pretty solid time base.