As an addendum to Curbeh's post...
First off, there are four states that relate to Heat and activating.
Normal- Anything in between 0% and 299% circuit (meter) for Crescent and Full moons. Anything between 0% and 199% for Half moon.
MAX- Upon reaching a full bar of circuit (300% for C/F, 200% for H) you will enter into MAX. This is a pseudo Heat. You can use your Arc Drive (your super, performed by 41236c) and you can Circuit Spark by trying to activate (A+B+C or 5E) when you are in blockstun or hitstun (think of it like a GG burst) which will use all of your meter. Time does not stop and health does not regenerate in this mode. Half moon will automatically activate Heat as soon as you reach MAX.
Heat- This mode will stop time, give you health regeneration (as long as you are not in hitstun/blockstun), and allow the use of your Arc Drive.
Blood Heat- This mode will stop time, give you VERY fast (Crescent) or even instant (Full) health regen, and allow the use of your Advanced Arc Drive (just a better version of your normal AD). This mode can only be activated if you are already in MAX (which means Half moon cannot activate Blood Heat).
Activating Heat is different depending on the moon style you're playing. Blood Heat, however, has no difference in activation between the moons styles.
Crescent moon- You can activate heat anytime you are in a Normal state and have at least 100% circuit.
Full moon- You can only activate heat by utilizing the Initiative Heat (IH for short, otherwise referred to as a heat cancel). IH can only be used in MAX, and you use it by activating heat during the active frames of any normal attack or some special attacks (dependent on character). It resets you to a neutral state (much like a GG roman cancel), regenerates all red life, and puts you into Heat. It goes without saying that IH allows for some amazing things.
Half moon- Heat activates automatically upon reaching MAX. When in heat, you will automatically Circuit Spark at the first opportunity (usually the first attack that hits you will trigger a spark).