When is it appropriate to use one? When is it appropriate to use the other? One simple characteristic of each of these is that a text box is instance specific, and a legend is type specific. A text box can be different each time you place one (it can be copied, but doesn't have any association to other instances of it). A legend is type specific and can be placed on multiple sheets, and when you change one, it changes them all.
When might this be beneficial?
If you have general notes that have to appear on multiple sheets exactly the same way, you can create a legend, type the notes, then place them on each sheet. If the note has to change, then all you have to do is change one instance of the legend, and all will change! If you did this with text boxes, then you would need to go to each sheet and change the note which can be cumbersome, time consuming and prone to human error (like spelling mistakes and the chance of missing one!).
Legends can also be used to create graphical 'legends' of elements in your models (like doors, windows, electrical fixtures, basically any family in plan or elevation view).
