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There are two ways to set a blocks template. Either in the block using 

$this->setTemplate('Vendor_Module::template.phtml');

or in layout

<block class="Vendor\Module\Block\BlockName" name="myblock"template="Vendor_Module::template.phtml"/>

Which way would be the best way to set a blocks template or what are the advantages/disadvantages of both?

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Prefere setting template in layout, so it could be extended easily in other modules just using layout.

If you have to set template depending on a condition, you could do it programmatically in block, just think of extensibility by using a public function (so it could be extended by plugin)

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