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Well, as noted, whatever works for you is "best".
Don't forget that you can put a note in the relationship, so that if there isn't one named specifically what you want. "Offspring of" is a choice under the "Belongs to" group, for example, and with a note of "Creator/Created" that might be enough; or not, as needs dictate. Likewise, a simple relationship with a note of "Cousins" might be sufficient for other things.
Where the part about letting the campaign needs drive the scope comes in, I think, is that you can always note all of the relationships in text snippets, and you might then only want to create Relationship entries for the ones that you want to call out.
Relationships are also good for showing hierarchies when a given Topic can be a member of more than one hierarchy. You can only have one Containing Topic at a time, so adding Relationships helps illustrate concisely other active connections relating to that Topic.
Some of them may be redundant.. you can make an Individual a "Resident" of a Location/ Community, make the Community the Containing Topic for the Individual, and refer to the Individual and the Community in the text snippets of each referring to the other.
The Relationships are most useful, I think, when you want to be able to overlay that on another display. I have not used it much, but it can be useful to show cases such as a "Master/Minion" relationship that bypasses the organization of another hierarchy.
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