In Odoo, lots and serial numbers have similarities in their functional system but are different in their behavior. They are both managed within the Inventory, Purchases and Sales app.
Lots correspond to a certain number of products you received and store altogether in one single pack.
Serial numbers are identification numbers given to one product in particular, to allow to track the history of the item from reception to delivery and after-sales.
When to use
Lots are interesting for products you receive in great quantity and for which a lot number can help in reportings, quality controls, or any other info. Lots will help identify a number of pieces having for instance a production fault. It can be useful for a batch production of clothes or food.
Serial numbers are interesting for items that could require after-sales service, such as smartphones, laptops, fridges, and any electronic devices. You could use the manufacturer's serial number or your own, depending on the way you manage these products
When not to use
Storing consumable products such as kitchen roll, toilet paper, pens and paper blocks in lots would make no sense at all, as there are very few chances that you can return them for production fault.
On the other hand, giving a serial number to every product is a time-consuming task that will have a purpose only in the case of items that have a warranty and/or after-sales services. Putting a serial number on bread, for instance, makes no sense at all.