Getting this wrong costs you the fixture in about two winters.
Dry rated — indoor only, no moisture exposure. Living rooms, bedrooms, hallways.
Damp rated — humidity and condensation, but no direct water. Bathrooms outside the shower, covered porches with walls on three sides, laundry rooms, kitchens.
Wet rated — direct water contact. Open decks, exposed entryways, inside a shower, anywhere rain or spray reaches the fixture.
The covered porch problem
This is where most people guess wrong.
A porch with a roof but open sides is wet rated territory, because wind drives rain sideways. A porch that's recessed into the house with walls on three sides can usually take damp rated.
The honest test: stand where the fixture will go during a storm with wind. If you'd get wet, buy wet rated.
Bathrooms
Inside the shower enclosure or within 3 feet of the tub: wet rated.
Elsewhere in the bathroom: damp rated.
Vanity fixtures over a sink are damp. Recessed cans directly above a shower are wet.
Why it matters more than the label suggests
Wet-rated fixtures use sealed gaskets, corrosion-resistant hardware, and drainage paths. A damp-rated fixture in a wet location will admit water into the housing, corrode the socket, and either fail or trip the circuit. It won't happen the first month — it happens the second winter, which is why so many people never connect the failure to the original choice.
Also check: many manufacturer warranties are void if the fixture is installed outside its rating. Buying up costs a few dollars. Buying down costs the fixture and the labor to replace it.