SQS seems really easy to use but has some message size restrictions, e.g. 256 KB message size (really, really small). On the other hand, ElasticCache seems to be more high-end? I am not sure if this assumptions are right - please correct me.
I am in the process of deploying an application on AWS use by making use of one or the other type of message passing (and/or caching) system. In what situations will I choose one over the other?
Comparing SQS to ElastiCache is somewhat like comparing... postcards to filing cabinets.
Which one is "better?"
It depends on what you want to accomplish, and in both cases, they have very little overlap in their functionality other than the fact that they all transiently store information.
A cache, like ElastiCache, is a place where information that's frequently accessed can be stored for frequent retrieval when repeatedly fetching that information from its authoritative source (often a database) is more expensive (typically in terms of resources or time) than fetching it from the cache would be. A cache is more like a filing cabinet with an open back that automatically drains old documents into the shredder any time there's a need to store new documents. This is referred to as eviction from the cache. Because of its purpose, the information stored in a cache is typically not considered durably stored. A node fails, or the data is evicted, and what you stored is not there any more.
“Also implicit is the fact that the cache can expire or evict values if they become too old or if the cache becomes full.”
— http://aws.amazon.com/blogs/aws/amazon-elasticache-distributed-in-memory-caching/
No problem, because the cache wasn't the authoritative data source... but while the data was there, you could access it very quickly. If you look something up and the cache doesn't have it, you go to the authoritative source for the data, and optionally, send a copy of it back to the cache so the next entity to ask for it may find it in the cache.
When you want something from a cache, you go ask for that thing, specifically.
On the other hand, a queue, like Simple Queue Service (SQS) is more like a postcard -- or, at least, that's what queue messages are like. You write the message, send it into the queue, and it pops out the other end -- once, typically. Ordering of messages isn't guaranteed (though its common for them to arrive in order) and messages are guaranteed to be delivered "at least once" (though, again, typically, duplicated messages are rare -- still, it's a massive, distributed infrastructure, so duplicated deliveries are possible).
When you want something from a queue, it sends you the next message in line -- you don't select which one.
If you need to cache information for random, quick, and repeated retrieval, and the information is disposable and recreatable, then of course ElastiCache is the choice of the two.
If you need to send messages between two parts of a system that run independently or at different speeds, then you're looking for a message queue, such as SQS. Typically, the small payload size limit is more than sufficient, because it's unnecessary to send a block of data in the queue message itself. Instead, you send a reference to the data, a pointer, an "id" from a transaction table or a URL to a web-accessible object (perhaps stored in S3) and the queue consumer can then fetch the chunk of data referenced by the queue message, and act on it.
Got the use case right, through experience. Actually deployed code on AWS about 2 years ago. Went with SQS because it was just what I needed to interface two parts of my cloud application. And indeed... 256 KB is way more than enough size ;).