Lookup filters versus validation rules
Key Takeaway
Use a lookup filter to guide users to valid choices in a lookup. Use a validation rule when the business rule needs a formula or when the object is close to its maximum number of lookup filters.
Lookup filters and validation rules both keep bad data out of records, but they work in different ways. A lookup filter narrows the records a user can pick in a lookup search, so the right choice is easy to find. A validation rule uses a formula to check the record when the user saves. It blocks the save with an error message when the data breaks a business rule.
How each tool works
A lookup filter limits the options a user sees in a lookup search dialog. It also automatically applies the filters that users would otherwise set by hand, so its main benefit is user efficiency.
A validation rule contains a formula or expression that evaluates one or more fields and returns True or False. When it returns True, Salesforce doesn't save the record, and the user sees your error message. You can show the message near a field or at the top of the page.