Divine Favor adds bonus healing anytime you cast a Monk spell on an ally including yourself.  Only Monk spells will gain the Divine Favor bonus but this includes spells which would otherwise not bestow any healing.  The bonus is roughly +3.2 health per rank in Divine Favor.   The follwing table shows the exact Divine Favor Bonus per rank.  Also included is the Monk spell Orison of Healing, a staple healing spell, which normally heals for 14~59 health tied to the Monk attribute Healing Prayers and the total amount of healing done when Divine Favor's bonus is taken into account.

As you can see Divine Favor's effectiveness scales up as things go along.  While at Divine Favor 1 / Healing Prayers 1 the extra 3 health from Divine Favor is a mere 13% more effective than a regular Healing Prayer 1 Orison, the effectiveness increases as things move along.  At Divine Favor 12 / Healing Prayers 12 the Divine Favor bonus is 39% of the total heal.   At lower levels the benefit from Divine Favor is outweighed by that from Healing Prayers but as attribute levels increase, the addition of Divine Favor makes more and more difference.