I’ve tried both, and settled on using nested tags - my vault for this is roughly 1,500 notes, with maybe a dozen types, with a few of the types having subtypes. I also use nested tags for other things too - things like theme, review/status, some other categorizations and process steps.
Main reasons I went with tags over properties is:
- consistency across all the different other things ie. one mechanism for all my needs
- future proofing; I can extend and nest as deeply as I need to as my vault grows and my needs develop
- makes the tag navigator useful as a kind of alternative folder structure for each nested tag set, I can drill down by type, or by theme, and so on
- tags are also visible on the graph if you use that (I do)
- in a few places I wanted to apply the tags within a note, usually on my longform notes and usually to mark an area that needs some editing, or that I want to come back and think on (this is obviously hard to do with properties)
- and probably some other hings that I’ve forgotten about
Obviously YMMV, but maybe my reasoning will help you figure out what works for you.