CCK field versus Taxonomy term. When and why

they are very similar solutions, both can represent the same relational data, thats why many developers might get started with one of them and later figure out they really would prefer the other way around

what happens with a cck textfield? (single value)
it allows you to enter text values in a column associated to a node

with multiple select you have a set of values associated to a node

with taxonomy you have the same, but, there are some extra features you get already implemented for taxonomy that won't have for cck fields
- if the universe of possible values is known or values are re-used with taxonomy you would have autocompletion and/or taxonomy pages which bring accessibility and organization to your site
- BUT, a taxonomy term has its limits, each term can have a description, but usually that description is not set when creating new terms while submitting a node
- to enhance taxonomy behavior there are several modules targeting different approaches
- OTOH cck fields also have several modules targeting different approaches, and there is when developers finds out they want to switch

you may think about taxonomy as an efficient way to have a DB in 3rd Normal Form with built-in accessibility support and also optional autocompletion support
while designing a DB you might find a column deserves a foreign key to another table with the set of possible values (DB normalization), that would be a perfect case for taxonomy if the related table will contain only values and at most an optional description for each term
otherwise, you might need more powerful solutions usually out of the scope of the taxonomy enhancer modules