Well, I don't have my grammar book handy, but one example I can think of would be when it is used like this:
'not knowing is half the fun.'
'non sapendo è mezzo al divertimento'
So I guess it's when the gerund is not used to indicate an ongoing action, rather just a general state of the action being done at any time. I hope that makes some sense.
Ah yes, and now I have my grammar book* out. The construction with the verb stare in this sentence is indeed called the "progressive" form, and is in fact a very specific use of the gerund. Here are some other sentence examples from my book that do not use the progressive form:
Uscì lasciando la porta aperta.
He went out leaving the door open.
Parlando con i suoi amici, Roberto apprese la verità.
Talking to his friends, Robert learned the truth.
Le ragazze passarono tutto il giorno lavorando nel giardino.
The girls spent the whole day working in the garden.
- Taken from: From: Italian Verbs and Essentials of Grammar, Carlo Graziano, 1987, pp.22,23
I have seen it called present continuous while traversing the duo tree. My book is fairly old, perhaps that is why it does not use that term. My book also mentions that this progressive form can only be used in past tense with the imperfect, no other past tense, which kind of makes sense because it indicates a continuous action.
You cannot say "is knowing" in grammatically correct English because "to know" is a stative verb. Such verbs are not used in the continuous tenses.
My understanding is that the use of the gerundio means that the activity is/was actually in progress (much like the English present/past continuous tense). The use of the simple present/past tense is not restricted to things that are/were actually underway, although that is often the case.