Natural Wood Siding
Natural wood siding, a perennial choice for builders, lends your shed a classic, rustic look, often exceeding other options in aesthetic appeal. Wood siding also offers plenty of installation selections, as it comes in beveled planks, tongue-and-groove boards, channel-style and board-and-batten varieties. In terms of durability, wood is more likely to warp than smart siding. And, when wood siding is installed too close to the ground, it may rot. As with other types of siding, wood accommodates priming and painting or you can stain it to match your home's look.
The Plywood Question
Plywood siding, such as the common T1-11 choice, presents a ship-lap look on its exterior surface, and may not offer the aesthetic value present in other styles, but it is affordable and installs quickly and relatively easily. Plywood nails directly to your shed's wall framing, making it arguably the quickest and most painless type of siding to install. As plywood panels overlap via interlocking milled edges, they also provide a relatively water-resistant option, particularly when reinforced with a bit of construction adhesive.
Smart siding is a product made from engineered wood. Although smart siding doesn't offer the richly textured look of natural wood, it is typically more durable -- a boon for sheds in harsh climates. It comes with a coat of primer on it already, making paint application easier and more effective. Compared with T1-11 plywood, smart siding is more expensive, but it offers increased resistance to rot and insects, less need for maintenance and an outer coating of oil, resin and pulp that helps it repel moisture.
More to Consider
As far as materials to avoid, Joseph Truini from the "Popular Mechanics" magazine and author of the book “Building a Shed: Expert Advice from Start to Finish” warns against using aluminum siding, noting that the material isn't “rugged enough to survive the inevitable beating outbuildings take.” Whether your siding comes raw or already covered with primer, back-priming the material -- applying a coat of primer to the back of each plank or panel -- helps prevent moisture absorption, which in turn wards off blistering.