React Context is a powerful tool for passing data between components and reducing the need for prop drilling. However, it's not designed to be a full-fledged state management solution like Redux or MobX. Misusing React Context for state management can cause unnecessary re-renders and performance issues. Technically, context is simply a wrapper over a component that passes data as props. Therefore, it's important to be mindful of its potential drawbacks and limitations.

So, when should you use React Context? Context is useful for smaller state operations, such as passing data between sibling components. It's also great for reducing prop drilling and making your code cleaner. However, it should not be used for global state, modular-level state, or app state.

To use React Context properly, you need to understand its best practices. First, always declare your context value outside of the provider component to prevent unnecessary re-renders. Second, use the useContext hook instead of the Consumer component to make your code cleaner and more readable. Finally, don't overuse context - use it only for small state operations that don't require a full-fledged state management solution.

In conclusion, React Context is a powerful tool that can help you pass data between components and reduce prop drilling. However, it's important to use it properly and be mindful of its potential drawbacks and limitations. By following best practices and using context only for smaller state operations, you can make your code cleaner and more efficient.