Unsanded grout is most often used with tile materials which may scratch easily (like glass tile). Unsanded grout can be more difficult to remove and should be washed sooner and applied in smaller areas than you can get away with using sanded grout.
Use sanded for ‘wide’ grout lines, and ‘un-sanded’ for small or no grout lines. Sanded does not work well for tight grout lines.
Generally unsanded grout is used when the tile spacers are 1/8" or less, and sanded for 1/8" or more (wider grout lines).
What do we do when we have 1/8" spacing? Our general rule, and we have used this for hundreds of tile applications, is this: if it’s the floor, we use sanded. Otherwise it’s unsanded.
It is important to read the manufacturer’s instructions on the bag, as recommendations may vary.
Don’t forget to use an additive or sealer, depending on the application. We usually use the best sealers (could be $80/ quart) to provide the maximum protection against water penetration and staining.
Sometimes, we use epoxy grout which is practically impervious to water, dirt build up, and mold/mildew. This is in wet areas or high traffic areas.