When is it appropriate to use "you" in fiction?

When using second person point of view, writers use “you” to refer to the main character of the story. Similar to first person point of view, second person is limited to knowing what this single character thinks and experiences. And the “you” character isn’t a general, vague everyman, but rather a specific individual, with his own personality, traits, and life experience. An example of second person point of view is Jay MacInerny’s Bright Lights, Big City:

You are not the kind of guy who would be at a place like this at this time of the morning. But there you are, and you cannot say the terrain is entirely unfamiliar, although the details are fuzzy. You are at a nightclub talking to a girl with a shaved head. The club is either Heartbreak or the Lizard Lounge. All might come clear if you could just slip into the bathroom and do a little more Bolivian Marching Powder. Then again, it might not.

Some authors use this point of view strategy to complement the kind of story they’re telling. Junot Diaz does this in “How to Date a Browngirl, Blackgirl, Whitegirl, or Halfie.” The main character—“you”—reveals a lot about himself and his life in this story written as a primer on dating in his neighborhood:

As you walk to the restaurant talk about school. A local girl won’t need stories about the neighborhood but the other ones might. Supply the story about the loco who’d been storing canisters of tear gas in his basement for years, how one day the canisters cracked and the whole neighborhood got a dose of the military-strength stuff. Don’t tell her that your moms knew right away what it was, that she recognized its smell from the year the United States invaded your island.

Second person is still a rare approach, but when done well it can feel fresh and engaging.

“You” can also be used to refer to a specific listener in fiction. In David Benioff’s “Neversink,” a first person narrator speaks directly to the woman who broke his heart:

I got your number from Michael and called you the next night, but you were busy that week, and busy the week after, and I resigned myself to never seeing you again. But then you called me, one month after the birthday party, and invited me to watch the meteor shower.

Writers will also use “you” to refer to people in general, much like we do when speaking casually. John O’Farrell does this in the opening of his story “Walking into the Wind:”

There’s a moment when you’re up on stage when you suddenly become aware that everyone is looking at you; that the entire room is totally focused upon what you are doing. In that terrifying split second your performance can crash to the ground or it can soar to great new heights; but the fact that you have the power to throw it all away is partly what’s so thrilling about being in the spotlight.
The word “you” has its place in fiction, but be careful with it. Use it when it is in line with the voice of the narrator, or satisfies a clear and apt storytelling strategy.