How do you decide between using Context, a state management library, or simply lifting state up?

Lifting state up works well when only a few closely related components need to share data. Context works well for moderately shared data that does not change extremely often, like a theme or the current user. A dedicated state management library becomes useful when an app has a lot of shared, frequently changing data, or when performance concerns make Context's re render behavior a real problem.

// Simple case, lifting state up is enough
function Parent() {
  const [value, setValue] = useState('');
  return <><Input value={value} onChange={setValue} /><Display value={value} /></>;
}

// Complex, frequently changing global data, a library like Zustand may fit better