A while back I wrote about understanding WireGuard's AllowedIPs, and also recently I wrote about how different sorts of WireGuard setups have different difficulties, where one of the challenges for some setups is setting up what you want routed through WireGuard connections. As Ian Z aka nobrowser recently noted in a comment on the first entry, these days many WireGuard related programs (such as wg-quick and NetworkManager) will automatically set routes for you based on AllowedIPs. Much of the time this will work fine, but there are situations where adding routes for all AllowedIPs ranges isn't what you want.

WireGuard's AllowedIPs setting for a particular peer controls two things at once: what (inside-WireGuard) source IP addresses you will accept from the peer, and what destination addresses WireGuard will send to that peer if the packet is sent to that WireGuard interface. However, it's the routing table that controls what destination addresses are sent to a particular WireGuard interface (or more likely a combination of IP policy routing rules and some routing table).

If your WireGuard IP address is only reachable from other WireGuard peers, you can sensibly bound your AllowedIPs so that the collection of all of them matches the routing table. This is also more or less doable if some of them are gateways for additional networks; hopefully your network design puts all of those networks under some subnet and the subnet isn't too big. However, if your WireGuard IP can wind up being reached by a broader range of source IPs, or even 'all of the Internet' (as is my case), then your AllowedIPs range is potentially much larger than what you want to always be routed to WireGuard.

A related case is if you have a 'work VPN' WireGuard configuration where you could route all of your traffic through your WireGuard connection but some of the time you only want to route traffic to specific (work) subnets. Unless you like changing AllowedIPs all of the time or constructing two different WireGuard interfaces and only activating the correct one, you'll want an AllowedIPs that accepts everything but some of the time you'll only route specific networks to the WireGuard interface.

(On the other hand, with the state of things in Linux, having two separate WireGuard interfaces might be the easiest way to manage this in NetworkManager or other tools.)

I think that most people's use of WireGuard will probably involve AllowedIPs settings that also work for routing, provided that the tools involve handle the recursive routing problem. These days, NetworkManager handles that for you, although I don't know about wg-quick.

(This is one of the entries that I write partly to work it out in my own head. My own configuration requires a different AllowedIPs than the routes I send through the WireGuard tunnel. I make this work with policy based routing.)