Placement of the margin supragingival, equigingival or subgingival is a decision that must be based on the situation. Some restorative situations require placement of a subgingival margin while others can be highly esthetic with a margin at or above tissue.
There will be certain instances when getting an esthetic result is unobtainable unless the margin is placed below tissue, such as, patients with discolored teeth or the use of very opaque restorative materials. However, it's also very important to know what the two major concerns are for placing margins subgingivally.
Going too deep: Biologically, the gingival sulcus has connective tissue and epithelial attachment. Together, the area is referred to as biologic width. If you go too far subgingival, you risk violating the attachment. Placing the margin too deep and in that zone of attachment causes the body to react in one of two ways: it either responds with inflammation of the tissue or it responds by resorbing the bone. The most common response is the inflammation, which results in red tissue surrounding the restoration.
Not going deep enough: There are patients who experience recession after having manipulations done restoratively. Not placing the margin deep enough ultimately leads to a new risk of producing a supragingival margin. In some cases, if you're using more translucent restorative materials for your margin, this situation won't be that much of an issue. However, if you are using materials that tend to be more on the opaque side, you'll end up with an exposed margin and noticeable white or dark line.