Limits and trade offs

• Online: a self custodial node should be online, or rely on a watchtower, to catch an old state published against it.
• On-chain costs: opening and closing channels pay normal on-chain fees, which matter when fees are high.
• Liquidity: big payments can fail for lack of balance along the route.
• Hot keys: the keys that sign channel updates live on an online device.
• Privacy: better than on-chain for payments, but channels themselves are public by default.

What it is good at

Payments of a few sats to a few hundred dollars, instant, with fees often under a satoshi per hop. Paying for a coffee, tipping a writer, streaming sats per minute of a podcast, or the donations of a website.

What stays on-chain

Long term savings and very large amounts usually belong on-chain, ideally in cold storage. Lightning is a spending wallet, not a vault.