It is used to express a continued or ongoing action in past, an ongoing action which occurred in past and completed at some point in past. It expresses an ongoing nature of an action in past.  For example, “he was laughing.” This sentence shows ongoing action (laughing) of a person which occurred in past. Past continuous tense is also called past progressive.  
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The past continuous describes actions or events in a time before now, which began in the past and was still going on at the time of speaking. In other words, it expresses an unfinished or incomplete action in the past. It is used: often, to describe the background in a story written in the past tense 

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