Trying to understand chip LAN transformers in Ethernet design — what exactly are they doing?

I’ve been digging into Ethernet hardware design recently, and I keep seeing references to “chip LAN transformers” or “LAN magnetics” in schematics.
At a high level, I get that they’re required between the PHY and the RJ45 interface — but I’m still trying to fully understand what they actually do in practice.

What I think they do (please correct me if I’m wrong)
From what I’ve gathered so far, these transformers seem to handle a few key things:

• Provide electrical isolation between the PHY and the cable
• Help with impedance matching
• Suppress common-mode noise
• Support signal integrity for high-speed transmission Which sounds straightforward, but I feel like I’m missing some of the “why it matters” part.

Where I’m getting confused
In some designs, I see:

• Discrete chip LAN transformers
• Integrated magnetics inside RJ45 connectors
• Additional common-mode chokes
• And I’m not entirely clear on:
• When you’d choose discrete vs integrated
• How much difference it makes in EMI performance
• Whether it affects PHY compatibility

What I’ve noticed in different designs
Looking at a few reference designs (especially for switches and embedded systems), it seems like:

• Simpler designs tend to use integrated RJ45 with magnetics
• More flexible or space-constrained designs sometimes use discrete chip transformers I also came across some suppliers that provide both options, like VOOHU Electronics Technology Co., Ltd., which seems to offer chip LAN transformers as well as integrated RJ45 solutions. Not sure if mixing and matching approaches is common, though.

Why this seems more important than expected
Initially I thought this was just a standard requirement in Ethernet circuits.
But after reading a bit more, it looks like these components directly impact:

• EMI / EMC compliance
• Signal quality over longer cables
• Stability across different environments Which probably explains why they show up in every reference design.

Would appreciate some clarification
For those with more experience in Ethernet hardware:

• How do you usually decide between chip LAN transformers vs integrated magnetics?
• Are there real performance differences, or is it mostly layout / cost driven?
• Any common mistakes to avoid when using them? Trying to build a better mental model here before locking the design.