When you think of an eBook, it's likely you think of a story on a Kindle. eBooks you read on devices like this are known as "reflowable". The text in a reflowable eBook organizes itself according to the screen size or your font size changes.
There is another, less common type. These are fixed-layout eBooks. Imagine turning the pages on a PDF. Everything stays in place, no matter what changes you make. If you shrink the viewing window, the page shrinks in proportion, and the text and images become smaller. They don't reorganize themselves.
When to choose a regular, reflowable format
Your book is mostly text.
Reflowable formats are easier to read on most types of devices. If the key to the reading experience of your book is the text, then a reflowable format is best.
You want your book to be accessible.
A reflowable format supports increasing the size of the text, or reading your book in another mode — such as a landscape view. This gives people with different needs or reading preferences more control.
When to choose a fixed-layout format
Your book is image-heavy, or follows a strict design.
Having the pages of your book defined individually is best if the key to the reading experience is the images, or their arrangement. Examples are children's picture books and cookbooks. In these books, something would be lost if the reader could not see all the elements of a single page at once.
You crave more control.
You surrender some control when you publish a standard eBook. For example, the reader is free to change the font, or its size. Choose a fixed layout if you'd like more authority over your reader's experience.
Your audience is unlikely to try to read your book on small screens.
Fact — fixed layouts look terrible on iPhones. But who would try to read a children's book on a screen that small anyway? Consider the genre you are publishing in, and the expectations your target reader has.