When should I use Parameter store for saving configuration vs AppConfig? For example, if I had to change the log level at run time, should that be stored in SSM or Appconfig?
What are the pros and cons? What are the differences in these two, specifically in the context of a serverless app with lambda functions?
The difference is with how they work, which is mostly noticed when dealing with fleet of applications you want to manage your config with.
You can think of AppConfig (AC) as similar to CodeDeploy (CD). CD allows you to deploy applications, while AC configuration files. With that, AC, just like CD, allows you to monitor successful deployments, choose strategies of deployments (linear, canary, all at once). It also has rollback capabilities. All the deployments can be managed and viewed from AWS Console, set up alarms etc.
SSM ParameterStore (PS) does not do any of the above things. Its just bare-bone store of string data. So if you have, lets say 1000 apps which you want to be updated from PS, you will have no control over deplyment strategy, no centralized console to view update status, rollbacks, nothing really. All these you would have to custom develop.