Why it matters when you are writing
The test is not whether the words differ but whether the sentence is yours. Read the passage until you can state its point aloud, put the source out of sight, write your version, then reopen the source and check two things: that you have not distorted the claim, and that no distinctive phrase has survived intact. Anything that survives should be in quotation marks or rewritten.
A paraphrase always keeps its citation. The idea is still borrowed; only the expression is yours. Dropping the citation because you rewrote the sentence is one of the most common integrity findings, and it is entirely avoidable — the citation goes in at the same moment as the paraphrase, not in a later pass.
Quote instead when the wording itself is the evidence: a definition you will interrogate, a phrase whose ambiguity is the point, a formulation so precise that rewording it would change what it claims. Paraphrase in every other case, because a page of quotations reads as a reading list rather than an argument, and reviewers say so.