Use "practice" as a noun (e.g., "I need to practice my piano skills") and "practise" as a verb (e.g., "I need to practise my piano skills").
No, they are not interchangeable. "Practice" and "practise" have distinct uses as a noun and a verb, respectively. Using them interchangeably can be considered a grammatical error.
Context matters in English because the meaning of words can vary based on the surrounding words, phrases, or situation. Words often have multiple meanings, and the intended sense becomes clear through the context in which they are used.
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