First we will understand what is reporting only consolidation. Reporting only consolidation means that the balances are not actually transferred to any ledgers. The data lies in separate individual ledgers. You only generate consolidated reports using ledger set.

Balance transfer consolidation is something, when the data is transferred from one Ledger to another.

Now we come to your question when you should use reporting only vs balance transfer consolidation.

It depends on your requirement, if the two ledgers are using the same COA and calendar, then you don't need to transfer the balances from one ledger to another.
Using ledger sets you can just group the ledgers together and perform the consolidated reporting from it.
However if the currency is different in both the ledgers, you need to run the translation process to get the data in same currency and then you can use it for reporting purpose.

Why to use balance transfer consolidation -
Now, if your COA or calendar are different then you cannot group the ledgers into ledger sets. Then first you need to standardize the data in the same COA.
COA mapping needs to be created before transferring the balance from one ledger to another.

When the secondary ledger will come into picture. Let us understand this with an example-
You have operations in UK and US with headquarters in UK. Now you want to submit the statutory reports in US and UK both in their respective GAAP. US in US GAAP and UK in IFRS. Also, you have to do a group reporting for both your entities US and UK.

Now in this case even if we use balance transfer consolidation in will not be accurate even if the COA and calendar will be same. Because the the data is not standardized. Both the ledger have different accounting conventions.

So we will create a secondary ledger for US Ledger and use US GAAP for Stat reporting.
And we will use both primary ledgers US and UK to consolidate the data.

NOTE - As a best practice we always keep the GAAP for all primary ledgers same as per the companies headquarter location.

Hope this clarifies your doubt.