When we reach for it
Teams who would rather buy observability than operate it, and estates already reporting into it. Usually the right call, since a self-hosted monitoring stack is itself a system that can go down, and it tends to go down at the same time as everything else.
When we would argue against it
Cost-sensitive engagements with high cardinality. The bill scales with what you instrument, and it surprises people. We would rather set the ingestion and retention deliberately at the start than have finance cap it for you after the first surprising invoice.
What it looks like in delivery
Instrumented through OpenTelemetry where possible, so the telemetry is not locked to the contract. Retention reviewed against what anybody actually queries, because most log volume in a mature system is never read by a human being.