COALESCE vs ISNULL

The COALESCE and ISNULL are functions that can be considered as abbreviates of the CASE expression. These two functions are primarily used to address certain situations when there is a NULL value expected in the input.
The COALESCE function accepts a list of expressions and returns the first that is not NULL. If all input expressions are NULL, then it returns NULL.
The ISNULL function accepts only two expression as inputs and returns the first one that is not NULL.
To see how these 2 functions work, see the demo below:

DECLARE
@x AS VARCHAR(3) = NULL,
@y AS VARCHAR(10) = '1234567890';

SELECT COALESCE(@x, @y) AS [COALESCE], ISNULL(@x, @y) AS [ISNULL];


Here's the output of this code:

COALESCE	ISNULL
------------	--------
1234567890	123

Differences:
- As you can see, the COALESCE returns the value of @y variable as expected. However, you may be wondering why the ISNULL only returns the first 3 numbers of the input. The reason for this is because the ISNULL function uses the first input's type. The first input variable @x (in this case VARCHAR(3)) type will be used. The COALESCE function however uses the data type of the value that has the highest precedence (in this case, VARCHAR(10)).

- Another difference between the COALESCE and ISNULL is that COALESCE is the standard while ISNULL is not. So, aside from having limited functionality (since it only accepts 2 inputs), it is recommended to always use the standard function for code flexibility/portability.

- The result expression for ISNULL and COALESCE are also different in terms of NULLability. Therefore, it makes a difference when these functions are used for example, in computed columns. For example, when you want to copy a table using SELECT INTO and you want to have the target column(s) to be defined as NOT NULL. If the source column is defined as NOT NULL, then both expressions in the SELECT INTO ISNULL(srcCol1, 0) AS targetCol1 and/or COALESCE(srcCol1, 0) AS targetCol1 will define the target column attribute as NOT NULL. However, if the source column is defined to allow NULL. The target column will be also defined as allowing NULL if the COALESCE is used while ISNULL will define the target attribute as NOT NULL.
See example below:


SELECT
ISNULL(custid, -1) AS custid,
COALESCE(shipregion, 'NA') AS shipregion,
freight
INTO MyOrdersTest
FROM Sales.Orders
WHERE shipcountry = N'Switzerland';


After running the code above. Note that the column definition for the shipregion is defined as NULL.

Now let's try running the code where we use ISNULL for the shipregion column...


SELECT
ISNULL(custid, -1) AS custid,
ISNULL(shipregion, 'NA') AS shipregion,
freight
INTO MyOrdersTest2
FROM Sales.Orders
WHERE shipcountry = N'Switzerland';


Note the column definition for the shipregion this time is defined as NOT NULL

For more details about these functions. Check out the Microsoft documentation here: https://msdn.microsoft.com/en-us/library/ms190349.aspx