Is varchar(MAX) always preferable?

There is a very good article on this subject by SO User @Remus Rusanu. Here is a snippit that I've stolen but I suggest you read the whole thing:

The code path that handles the MAX types (varchar, nvarchar and varbinary) is different from the code path that handles their equivalent non-max length types. The non-max types can internally be represented as an ordinary pointer-and-length structure. But the max types cannot be stored internally as a contiguous memory area, since they can possibly grow up to 2Gb. So they have to be represented by a streaming interface, similar to COM’s IStream. This carries over to every operation that involves the max types, including simple assignment and comparison, since these operations are more complicated over a streaming interface. The biggest impact is visible in the code that allocates and assign max-type variables (my first test), but the impact is visible on every operation.

In the article he shows several examples that demonstrate that using varchar(n) typically improves performance.

You can find the entire article here.

Look here for a good answer:

Should I use varchar(n) or varchar(MAX)?

The short answer is that from a storage perspective it's the same, but from a query optimization perspective, it's better to use varchar(N).

Here's what microsoft recommends:

• Use char when the sizes of the column data entries are consistent.
• Use varchar when the sizes of the column data entries vary considerably.
• Use varchar(max) when the sizes of the column data entries vary considerably, and the size might exceed 8,000 bytes.

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