In Czech, formal addresing is used in formal situations (such as at the doctor, at the school, in the shop). We address people formally when we do not know them closely or the social organization requires it. This way of addressing is called vykání (comes from the pronoun VY - formal you).
We also use the same form when addressing more people (but this does not indicate whether the situation is formal or informal).
Informal addressing (tykání)
We use informal way when addressing people who are close to us (family members, friends) or children. This way of addressing is called tykání (comes from the pronoun TY - informal you).
If you want to suggest someone to start using the informal way, you will ask Můžeme si tykat? (Can we use the informal addressing?)