The core difference
Boids-style movement is emergent: each agent reacts to neighbours using rules such as separation, alignment and cohesion. A formation system is explicit: each unit has a meaningful target slot. The two approaches solve related but different problems.
When formations are better
Use explicit formations when the player expects a squad to keep a recognizable shape. RTS armies, tactical squads and ceremonial arrangements usually benefit from stable positions because the player can predict the result.
When boids are better
Boids can be useful when the group should feel fluid and organic. Flocks, crowds, swarms and loose groups can look more natural when no exact slot assignment is required.
Combining both
The approaches do not have to compete. A formation can provide the desired position while boids-style rules provide local separation and cohesion. In this model, the formation expresses intent and the steering layer handles local motion.
Tuning priorities
If separation is too strong, a formation can dissolve. If formation attraction is too strong, units may ignore collisions. Give each behaviour a clear role and tune the relative weights with a small test scene.
Performance considerations
Both approaches can become expensive with large groups if every unit evaluates every other unit. Spatial partitioning, cached neighbours and lower-frequency updates can reduce the cost without changing the visible result.
Choosing for your game
Start with the player expectation. If players need to command a squad into a specific shape, start with formations. If they need a natural-looking crowd, start with steering. If you need both, keep the systems separate and combine them at the movement layer.
Conclusion
The most reliable Unity workflows separate responsibilities, make expensive work predictable and turn repeated checks into repeatable systems. Start with a small implementation, measure the real bottleneck and expand only when the project needs it.