it's not an engine in the sense of "comes with a full editing environment" like Unity, Godot, etc. It's more like a rendering engine. You have to bring your own text editor, pixel art software, map editor, and programming language (there's Python bindings which are probably the easiest way to get started).
You can use it to faithfully make games in the style of the 16-bit era, using sprites, tilemaps with animated tiles, palette tricks and per-scanline effects (including parallax, & mode 7 like you said).
You don't have to use it with another engine, because Tilengine is also capable of spawning its own window and handling user input. (But of course you could use it with another engine if you wanted to, as long as you were able to get it rendering to a texture.)