Stain will color your wood while keeping the grain pattern visible. Paint will completely obscure the pattern of the wood grain.
Stain penetrates the wood, and generally only a single coat is necessary or recommended. Paint forms a coating over the wood. Typically, two coats of paint are applied over a coat of wood primer.
When stain fails, it fades. The siding is then washed, and the product re-applied. When paint fails, it peels and lifts. The siding must be sanded or stripped prior to re-application.
Stain will require more frequent maintenance than paint. On siding, you might expect five years from stain, versus 10 to 12 years or longer with paint.
Both stain and paint will protect your siding from harmful ultraviolet (UV) rays from sunlight, and exposure to moisture. Because it completely coats the wood, paint provides superior, longer-lasting protection from sunlight and water.