The secret to know when to use teflon tape is by identifyng the type of threads you are sealing. Eaglebeak is on target with his advise. There are three commonly used thread types in high pressure compressors and tank fittings used in this sport. NPT, BSP, and Metric. Most Chinese hoses, fittings, and compressors have M10 threads which are parallel threads which have no taper. BSP hoses and fittings are also parallel threaded. Parallel threaded fittings don't use teflon tape to seal. They use delrin disks in the base of the fitting, or they use dowty seals, or they use o-rings. A dowty seal is a rubber o-ring encased in a brass outer ring. NPT fittings are tapered. You can see the taper if you examine any NPT thread male fitting. They require teflon tape to give a leak proof seal. This may all seem complicated, but it's not. No guessing is needed.
It is not dangerous to use white teflon tape to seal NPT fittings. Leaks occur using white teflon tape when an NPT fitting is not tightened enough or when mismatched fittings are used. A user needs to understand what he or she is sealing. Tape is not a cure-all for trying to seal mis-matched fittings. Threading an NPT fitting into a BSP fitting will not work and is asking for leaks or worse. If white teflon tape was dangerous or unsafe, then there are a lot of high profile vendors who would be out of business. Teflon tape just needs to be used where it is appropriate. If you see white teflon tape on an existing tank, hose, or compressor, it is an indication that it is sealing an NPT junction.
Read the owner's manual or go online to find what type of fittings you have and understand the difference between NPT, BSP, and Metric fittings. It requires a willingness to learn what you have and what seal is appropriate. Use tape on tapered fittings (NPT), Use o-rings, delrin discs, or dowty seals on Metric and BSP fittings. Don't mix and match fittings. NPT, BSP, and metric don't seal reliably if mixed together at a joint. It's like trying a square peg in a round hole.