When a tooth losses signifigant amount of it’s structure (usually 1/2 of the tooth or more) a full coverage restoration such as a crown or onlay is indicated.
If the filling covers more than 1/2 the tooth, the remaining tooth structure is prone to fracture. By covering the top of the tooth we can prevent or delay further fracture.
Although crowns and onlays help us salvage badly broken down teeth, not all teeth can be salvaged by a crown. In other words, there is still a certain minimum amount of tooth needed above the gum to sucessfully restore a tooth. This is usually 3 mm of tooth above the gum for a full 360 degrees all the way around the tooth.
The difference between a crown and an onlay is that with an onlay only 2-3 mm of tooth along the biting surface and any decay must be removed. With a crown, tooth structure is removed all the way down to the gingiva all around the tooth. So, as you can see an onlay is a much more conservative restoration. The only downside is that the margin (where the restoration meets the tooth) is often in the middle of the tooth and may be visible. As such, these work better on back teeth.
Finally crowns and onlays can be constructed out of metal, ceramic fused to metal or all ceramic. Ceramics have come along way in the last ten years such that their strength is now approaching that of metal. As a result all ceramic (white) restorations can be used throughout your mouth, so your crown will look completely natural and will match your own teeth in consistency and colour.