I have a good understanding of the role of Datums in Cardano's Extended UTXO model, including their use in representing the state of a smart contract. However, I'm seeking further clarification on the different types of Datums that can be used, such as inline and hashed Datums. Could someone elaborate on the various types, their specific uses, and the considerations for choosing between them in the development of smart contracts?
The Inline Datum was introduced with the Vasil Hard Fork (https://cips.cardano.org/cips/cip32/). Before this, only using a Datum Hash was possible. Using a Datum Hash is more difficult for a decentralized application, because the Datum has to be shared off-chain between all parties who are doing transactions.With Inline Datums, it becomes a lot easier, because the Datum is visible on-chain.
There is another point here as well, in addition to George's. The addition of "reference inputs" (https://cips.cardano.org/cips/cip31/) also means that it is possible to use datum without spending the corresponding UTxO, as was necessary before. This also expands the use-cases and makes dealing with (for example) concurrency and shared state easier.