It is often used affectionately, similar to how "Frankie" or "Fran" might be used in English. It's a common name in Spanish-speaking cultures.
It's important to note that while it's a common nickname, the word "panchita" can also be used as a derogatory term in some contexts, particularly in Mexico. It's always good to be mindful of the context and the intended meaning when encountering this word.