Like other East Asian countries, Japan is a heavy user of seals (hanko) as a means of authenticating documents. So is it better to use a seal or a signature?
Japanese civil procedure doesn’t particularly care. If you ever end up in a Japanese courtroom, a signature is just as admissible as a seal impression for proving that someone approved a document. Some lawyers recommend signing and sealing to have twice the protection. If you’re really paranoid, the best way to avoid doubt is to sign or seal your document before a notary public. There are Japanese notaries in every city, and most embassies and consulates offer notarial services to citizens and related parties (often for much less than the Japanese notaries charge).
Although you can get away with a signature for most private matters, seals are required under Japanese law when registering certain things with the government: companies, real estate, cars, childbirths and the like. But foreigners get some special consideration thanks to the Act Regarding the Signatures, Seals and Indigent Certification of Aliens, which was passed by the Diet in 1900. An imperial order in 1926 struck out the second half of the statute (I believe it had to do with getting court fees waived, which is the contemporary use of the Japanese term), so its effective portion is now just two lines:
Article 1. Where a signature and seal are to be used pursuant to a law or ordinance, it shall be adequate for an alien to use a signature.
2. Where only a seal is to be used, an alien shall be deemed to have given a seal by virtue of their signature.
Japanese nationals resident outside Japan can also use signatures for such transactions, mainly out of necessity: since they are not registered residents of a Japanese city, they cannot have the registered seal which is normally needed to record legal title to things. The usual alternative, for both foreigners and non-resident Japanese, is to get a signature certificate from a consulate or local authority, which shows the person’s signature and has an official attestation to the effect that “this is the verified signature of so-and-so.”
This doesn’t stop seals from being necessary in some private transactions, such as banking, where a private counterparty simply demands that a seal be used. In that case, you have no choice other than to complain. But institutions are starting to be more flexible with seals and signatures, so it’s becoming increasingly rare to need a seal for private transactions.