There are TWO types of data connections in Tableau. LIVE and EXTRACT (IN-MEMORY).
Live connection is for high volume data and send logic to data. Extract brings data in to memory, i.e Data to the logic.
There are no standard rules to decide on which connection to choose. Depending on the situation and resources, we must choose the connection type that helps to provide responsive report.
In general high volume data and frequently changing data may be eligible for LIVE connection. Again, it all depends on the different sources and their performance abilities.
Low volume data and less frequently changing data may be eligible for EXTRACT connection. Again, it all depends on the available storage, memory, cache and other resources.