Wouldn't dropping these chemical weapons payloads like during the bombing of Britain have had a more desirable effect for them? They used chemicals efficiently to kill prisoners and in concentration camps but did not use them in warfare? It doesn't make sense please explain.
There is only speculation about this, but the general belief is that it was fear of retaliation.
After WWI, Germany was forbidden from creating chemical weapons within their country (this was bypassed by German scientists working jointly with the Soviets within the USSR). Because of this, combined with the idea that the Germans discovered nerve agents by accident, Germany assumed that the Allies had already discovered nerve agents as they had been continuing research in chemical weapons after WWI.
It was also known that each power was putting substantial effort in to developing defense capabilities against chemical weapons (e.g., allied troops who stormed beaches in Europe were equipped and trained to handle chemical events, and were frequently followed by troops who specialized in decontamination in case chemical weapons were used). This preparedness would significantly impact the effectiveness of chemical weapons.
The primary reference I used for this response is a good read if you're interested in chemical and biological weapons. It is Contemporary World Issues - Chemical and Biological Warfare, Second Edition by Al Mauroni.
Well, for one, using gas weapons - any chemical or biological weapon, actually - is a violation of the Geneva Conventions. You can make the argument that the Germans were already in deep by the time they got to Stalingrad, but there would have been zero chance for any sort of negotiated surrender had they gassed the Soviets then.
Second, imagine what would happen if the Germans started dropping gas bombs on English cities. First off, the Americans would be essentially forced into the fight right away - you can't violate the GCs without a global reaction - and secondly, the British would be able to retaliate in kind. No-one wants to have their own cities gassed. It's a matter of reciprocity. It's the same reason why the British and Americans never anthrax-bombed the Germans; someone could easily have done the same to London, and that would have been fucking disastrous, not only as a function of civilian deaths, but also in terms of political and popular support in their homelands.