Fine-tuning is further training of an existing model on your own examples so that it reliably adopts a format, a tone or a classification scheme. It changes behaviour, not knowledge. For the common requirement — "the model should know our documents" — retrieval is the correct and far cheaper answer.
Fine-tuning needs a few hundred to a few thousand clean, consistent examples, and the work is mostly in producing those, not in the training. It also fixes you to a model version: when the base model is superseded, the tuning has to be redone. Treat it as a commitment with an ongoing cost, not a one-off improvement.
Where it fits in a build
It earns its place when you need a very specific output structure every time, when a smaller cheap model needs to match a larger one on one narrow task, or when the tone must match a house style that prompting cannot pin down.
Common mistakes
Fine-tuning to add knowledge, which is what retrieval is for.
Training on inconsistent examples, which teaches the model to be inconsistent.
No held-back test set, so nobody can prove the tuned model is better than the prompt it replaced.
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