Choosing a scan tool that can actually diagnose
Short answer: The feature that matters is live data. A tool that only displays the code number cannot complete almost any diagnosis, because nearly every decision depends on watching a sensor value change in real time.
Code readers versus scan tools
A twenty dollar code reader tells you the number and clears it. That is all. Every diagnostic procedure on this site reaches a point where you must watch a value move — fuel trim as RPM rises, a downstream oxygen sensor as the engine warms, misfire counters at idle. A reader cannot show you any of that, so it can tell you that you have a problem but never which one.
What to insist on
Live data streaming, with graphing if possible. Freeze frame display. Readiness monitor status, so you know whether a repair has actually been confirmed. Mode 6 test results are a bonus that shows the raw pass or fail margins behind the monitors.
What is worth paying more for
Bidirectional control lets you command components rather than only observe them — cycling an EGR valve or running a fuel pump on demand turns a guess into a test. Manufacturer-specific codes matter if you own a European vehicle, where much of the useful detail sits outside the generic list.
What you can skip
Built-in repair databases go stale and duplicate what you can look up free. Lifetime update promises are worth exactly as much as the company's lifespan. Very cheap wireless dongles paired with a phone app are fine for reading live data if the app is good, and are often better value than a mediocre handheld.
A realistic recommendation
For occasional home use, a decent Bluetooth adapter with a well-reviewed app covers live data, freeze frame and monitors for well under a hundred dollars. If you work on cars regularly, a mid-range handheld with bidirectional control pays for itself the first time it saves you from replacing the wrong part.