Quick Answer: Choose Server Components by default in Next.js when the UI can be rendered from data, routing, or static content on the server, because they reduce client bundle size, improve performance, and simplify data fetching. Use Client Components only when a component needs browser-only capabilities such as state, effects, event handlers, refs, or access to APIs like window, localStorage, or real-time interactivity.
In a modern Next.js architecture, the decision between Server Components and Client Components should be driven by rendering responsibility, interactivity requirements, and bundle cost. Server Components are ideal for content-heavy, data-driven, or SEO-critical sections because they execute on the server, keep sensitive logic out of the browser, and avoid shipping unnecessary JavaScript. Client Components should be reserved for isolated interactive surfaces—forms, filters, modals, dashboards, and UI state management—where React hooks, event listeners, or browser APIs are required. The best pattern is usually a server-first composition model: render the page shell, fetch data, and assemble layout on the server, then introduce Client Components only at the smallest practical boundary where interactivity begins.