Laravel Sanctum is a lightweight solution for securing Single-Page Applications (SPAs) and first-party applications, offering token-based authentication without the complexity of OAuth2. Laravel Passport, on the other hand, provides robust OAuth2 features for complex APIs with third-party integrations, such as healthcare systems or financial information platforms. When choosing between the two packages, consider the type of application, its security needs, and the level of authentication required, as each package is tailored to meet specific requirements, including API-based applications, SPAs, and traditional web applications. Laravel Passport is ideal for complex APIs with third-party integrations, while Laravel Sanctum suits simpler SPAs and first-party applications that require lightweight, token-based authentication or session-based solutions.