English-speakers nearly always say 'Bless you' when someone sneezes. The conversation goes like this: Achooo! Bless you! Thank you. Unless the speaker is a minister of religion ( for example, a priest in a church) people very rarely say 'God bless you' in English-speaking countries. It is not a normal thing to say in everyday life, and in most situations it would make the listeners feel embarrassed and uncomfortable.

In the U.S. people say God bless you very often after someone sneezes. Probably "bless you" in more common, but you'll still here the "God" version as well, even if it is slightly annoying. I live in the northern part do its not just in the south. Although it's possible it is more popular to say it that way there. People are not necessarily making a religious statement when saying it.

It can be used whenever, however it would be used mostly in 1. Saying Goodbye or 2. wishing for a person's health/wellbeing. It is a religious comment. Also, culture side note: "bless you" is often said by a person after another person sneezes

It's honestly never occurred to me that "bless you" might be short for "God bless you"! Whatever the case, they're You say "bless you" to someone after they sneeze. They'll usually respond "thank you". This is standard English. While it has religious origins, nowadays it's just a saying and it's not weird if someone who isn't religious says it. As far as I know "God bless you" is only used in the southern US. I think it can be used to say both "good luck" and "goodbye", but it'd probably be better to hear it from someone who uses it. I don't know if it's as normal as "bless you" there, or if it's only used by religious people.

'Bless you' is what people say after someone sneezes, as a custom. Speaking from a British perspective I think nowadays it is strange to use these phrases other than in the one specific situation above. A lot of people are not religious here and thus have no cause to say these phrases. And if people are religious they normally do not want to impose anything else on others for fear of making them uncomfortable. I know it's supposed to be a nice thing to say, but still it's a bit odd if someone says "God bless you" to you when you don't believe in God. The United States is a more religious country than the UK, I would not be surprised if the situation is different there.