@Component Preferable for component scanning and automatic wiring.
When should you use @Bean?
Sometimes automatic configuration is not an option. When? Let's imagine that you want to wire components from 3rd-party libraries (you don't have the source code so you can't annotate its classes with @Component), so automatic configuration is not possible.
The @Bean annotation returns an object that spring should register as bean in application context. The body of the method bears the logic responsible for creating the instance.