Many SOI based planar structures without vertical mode coupling are able to make use of varFDTD, such as a ring resonator, and there is a white paper. However, there are certainly some types of structures that varFDTD is not the best candidate. Here is some description from the solver physics of varFDTD solver:
The varFDTD solver is based on collapsing a 3D geometry into a 2D set of effective indices that can be solved with 2D FDTD. This works best with waveguides made from planar structures, as the main assumption of this method is that there is little coupling between different supported slab modes. For many devices, such as SOI based slab waveguide structures, that only support 2 vertical modes with different polarization, this is an excellent assumption.
Vertical modes coupling
varFDTD is designed for planar structure where there is no vertical coupling between slab modes. When the structure is collapsed into a 2D set of effective material, the modes calculated by the solvers are the slabs modes supported by the slab waveguide. If there are coupling between the vertical slab modes, this assumption is not valid any more. This spot size converter is an example where there are vertical coupling during mode propagation. The screenshot below shows the vertical mode profiles of the input smaller si waveguide and output larger polymer waveguide. The xz field profile shows how light is converted from a smaller to a larger spot size.
Thus, varFDTD should not be used and this is an example that EME is recommended.
In the varFDTD solver setting, you will need to choose what polarization for the simulation. In other words, when TE is chosen, only TE modes are considered. If there are conversion between TE and TM modes, for example this polarization converter, we should use EME instead since varFDTD is not designed to handle polarization conversion.
If your structure is non-planar, then EME or FDE maybe be a better option, such as a fiber. There is also a post related to this scenario.
There is a post that has a little more general info on when to use what solvers.