After the update to PMS 1.42.1 there is the new “Downloads temporary directory” path under “Settings>Transcoder” available. Unfortunately I didn’t find anything on the support page (yet). 
Are there any recommendation when we should use this? I guess this doesn’t make much sense on slow network HDDs.
For now I have both temporary directory paths empty.
The default location for temp transcode directories is in the Plex Data Folder (/plex or /PlexMediaServer on Synology NAS). Unless the NAS is running out of space for that location or you want to move the transcode directory to a different location, then you don’t need to worry about it.
When transcoding for streaming, Plex creates many small files that are sent to the client. As the stream progresses, the initial small files can be deleted to make room for new ones because they have already been sent to the client.
Transcoding for downloads is different. When transcoding for downloads, Plex transcodes the entire source file into a single destination file, output.mkv.
With versions before 1.42.1, streaming transcodes and download transcodes use the same location.
That can cause problems for servers with limited transcode space (RAM drive, small SSD, etc.).
It is possible for the output.mkv file to consume all the transcode space. When that happens it can impact other users. They cannot transcode if needed and playback fails. Also, unless the person who requested the download aborts the process, it simply repeats itself, failing each time.
Separating the transcoder temp directory and the downloads temp directory helps to alleviate the situation. The download directory can be placed in a location with additional space which can hold the output files without impacting streaming for others.
Example: My Plex server was configured to transcode to a 16 GB RAM drive.
A family member tried to download a movie that was 30 GB and needed the audio transcoded.
The download transcode consumed all of the RAM drive. Other users could not stream if they needed to transcode.
Restarting Plex cleared the RAM drive, but the problem re-occurred when Plex re-queued the download. I had to change the transcode directory back to the SSD to restore normal operations.
With 1.42.1, I can place the streaming transcode directory on a RAM drive and use the SSD to hold the download transcode directory.
Thanks for your detailed reply! 
It makes sense that converting a file to another format could fill up the RAM pretty quickly. But if I understand you correctly splitting these paths up is more a thing for server with a SSD cache or huge RAM disk.
I’m using a Synology DS224+ with 6 GB of RAM. Would it make sense to put one of the paths to /dev/shm ? Personally I doubt it because a) the storage is not big and b) not fast enough.
I would not move the transcode directory to /dev/shm.
The read/write speed to the hard drives is plenty fast.
OK so I leave it like this.
Thanks again for you help! Appreciate it!
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