Butter separation in english toffee candy
Butter separation doesn't only refer to the butter separating from the toffee (sugar), butter is make of milk fat rendered and the milk solids, when butter separates this is due to these parts separating. This is the fat that you see on the toffee, this usually comes from the components cooling at different speeds.

As with anything that you are making using melted butter, like a hollandaise sauce, adding a spoon or two of very hot water and agitating helps with the dispersion of both the fats and the heat. Stirring is an important component to ensure the heat is equally distributed throughout the mixture.

Thanks to @Aaronut for correcting the language!