How would one know when to choose 'preferred' or 'preferable'?

These both are one and the same ..

Common usage finds these words are used interchangeably, but there is a subtle difference.

The suffix "-able" means capable or worthy of being acted on. It does not mean "has been acted on".

So "preferable" means capable or worthy of being preferred. But it does not necessarily mean that someone has taken the action to prefer something.

If something is "preferred" (which is past tense), it means that someone has taken the action to prefer it.

As an example, a housing developer may know from past experience that homes facing the waterfront have been preferred. (In the past, it has been the orientation of choice.) Knowing this would lead the developer to conclude that new homes built facing a waterfront would be preferable.

While the words are similar in meaning, there is a slight difference in usage.

When used as an adjective, the word "preferred" generally precedes the noun that it defines (preferred customers, preferred method, preferred means, preferred spelling, etc.) e.g. E-mails are most doctors' preferred means of communication.

When the word is used after a noun, it is generally used as a passive or active verb and not an adjective. (e.g. Emails are the means of communication most commonly preferred by doctors. )

In addition, in this usage, the word generally refers to a statement of preference, what people prefer, and doesn't imply that one means is necessarily better or more valuable.

In contrast, the adjective "preferable" usually a predicative adjective, appearing after a linking verb: not "that is the preferable method," but rather "that method is preferable." See this Google Ngram graph:

And while the word can be synonymous with preferred, it also conveys the sense of something which is better or more desirable. e.g. This has more of the features you're looking for, so I think that this one is preferable.