When comparing wood chunks and wood chips it all comes down to how you intend to grill or smoke your entree. While cross overs are certainly possible, ie: smoker trays for chips on a propane grill, most of us grillers like to take the easy route to perfection.
Therefore the rule of thumb is: chips for your smoker and chunks for your propane grill. For the time being I will leave the charcoal enthusiasts out of the equation because they already know that it does not make any difference. Chips or chunks added to charcoal does the same thing.
First of all, most backyard smokers are only equipped to handle chips. Secondly, propane grills are not manufactured to handle combustible wood for flavoring. Therefore, some adaptation to add wood smoke is required. Enter the wood chunk from stage left.
Wood smouldering on the cooking service of a propane grill with the cover shut will act like a smoker albeit much faster. When grilling burgers, dogs, steaks, or chicken, if you place the appropriate wood chunks around the perimeter of the grilling surface and close the cover while cooking you will infuse your entree with the smoke flavor. Voila!
Keep a water spritzer handy to control any flare ups and be sure to empty any ashes that may accumulate.
Also, I am sure this will negate any manufacturers warranty but in my opinion over the years the reward has been much greater than the risk.