After the installation of SQL Server, one of the major decisions to make is which authentication to be enabled for the connections to be served from SQL Server (Windows authentication or SQL authentication). Windows authentication is best in terms of security as login/passwords can be captured by network sniffers and tend to be less secure. Some prefer to go with mixed mode to avoid the pitfalls of either and make it convenient for the application developers.

However broadly categorized reasons for either usage are mentioned below.

SQL Authentication

connections coming from external domains

Need web applications to access like Entity frameworks, ASP.NET application etc.,

Windows Authentication

connections mostly from users belonging to a domain controller attached by Active Directory

App server and DB server are connected to the same domain