How do i know which hero to choose?

If I'm asked to give advice for new players that will play in single player, I would say that a hero has basically 3 characteristics that you should consider asking the following 3 questions, and yes, if possible in that order:

1. What do I want this hero for? This one will tell you which hero class you need.
2. Do I need any special ability? This one will tell you which faction you need.
3. Do I have some free senator slots? This one will tell which political party is better for you.

If you look at this folowing that order:

1. Hero class or what do I want this hero for?

This one is IMO the most important, so it goes first over the following two. Essentially there are 4 classes of heroes, and everyone folfills an specific role, i.e. Guardians makes good commanders and overssers good governors. Having this in mind, ecah class will ecel in:

• Guardians: excellent admirals for fighting. They're the guys you want to protect choke points or to send in first line agains your rivals.
• Seekers: they have exceptionally high mobility. They're good for exploring the galaxy at early game. Another use is to fast cover long distances, which is very handly when doing the Academy quest of fighting in the other side of the galaxy.
• Overseers: they make good gevernors, specially if you're interested in food, industry and strategics.
• Conseulors: useful as governors if you're short in science, dust or influence.

2. Hero faction or do I need some special ability?

Once you pick the class, you have to consider if you need any specific ability. Every faction is better than others in some sense, but some faction have specific abilities that may be handy. Here I mention the ones which have some ability in faction tree that is most specific, not the fations that gives bonus to FIDSI, even if these bonus are better.

To consider:

• Horatio: the only hero tree that increases lusuries output.
• United Empire: they have an extra ability to get more strategics in faction tree, which adds to the overseer tree.
• Unfallen: IIRC the only one that have an ability that increases fleets HP regen.
• Sophons & Eusocials: as not being specific, they have approval bonus in faction tree.
• Vaulters (DLC): they have an ability that gives you Titanium and hyoerium from nothing.
• Hissho (DLC): they have a senator skill that increases your Behemoth cap by 1.

3. Political party or do I have free senator slots?

Once you have fulfilled the previous ones, you should consider, specially in the case you want various heroes of same clase, to pick heroes from different political parties. The reason is that if you're playing with a government that it's not a dictatorship or autocracy, you'll have more than one senator slot. Having this extra senators slots filled always with heroes is useful once you unlock senators skills that gives empire-wide bonus, as long as this doesn't interfere your base strategy.

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Well this is what I would tell to newcomers who play single player. For multiplayer advice, more advanced players or people who is looking to min/max, I would reccomend reading other answers (@koxsos made good suggestions).

Usually guardian offers the highest long term value imho scoring both strongest fleet bonuses combined with strongest industry boost.
Aslo helps to have one scout available for the off-lane movement capability. But since about 90% of the game is to be decided in a big fight in space, you probably want a guardian, to multiply the efficiency of the fleet appropriately. This is why my preference scale would be heavily biased based on combat performance rather than other "useful" stuff (not so useful if you are dead though).

If you can score a sophon/vodyani hero for their +40% beam dmg or hissho hero for behemoth cap they can easily win you the game cause "balancing" making your fleet immensely more powerful than with other hero types. They also come with a neat movement speed bonus.

From the "pseudocompetitive and pseudometapushing" standpoint I would probably strongly prefer those two combinations over anything, but practically speaking the game will do most of the choice for you given what spawns in selection/market. Of course you can make it more likely to be a guardian by being fleet oriented and aggresive. If you just want to spam lots of heroes for the sake of federation expansion +1, you won't really care anyway.

So my final picking order would look like this:
vodyani => hissho > sophon > craver/guardian => scout >  UE > anything > lumeris,

cause Lumeris seriously do not offer all that much and the "ultimate" is effectivelly useless.
But do not get me wrong the T1 bonus to shields and hp is not completely useless, it is just somewhat negated with +40% on energy weapons or 80% shield penetration and more or less WHATEVER other racial skill category available.

It also helps to get your senate slots filled with senate skills. Combining two guardiands with -50% discount will result in most diplomacy actions being free essentially overshadowing the +40 influence per trading company from whatever skill category that is. Combining vodyani heroes with +1 FIDSI per pop is also something to consider.
Comparison across racial skills certainly raises an eyebrow from a balancing standpoint.

Of course since we have "TUTORIALS" and "HELP" sections instead of an actual wiki with relevant data to read this stuff up, you are to go out there and explore for yourself.

I feel like I could make a guide about it all, but someone already did, not so long post-release, so data is somewhat irrelevant and is about as interested in continuously keeping updating variables with every patch as much as I am. But looking the table up you might understand where my preferences are coming from: steam guide with the table

Based on that data (which was real data at the date of release) Vodyani starter (vodyani/guardian) came with a total of:

vodo:

+80% energy weapon damage

+8 movement
+40% fleet health. +80% ship dmg
guardian:
+80% fleet damage
+40% fleet shields and damage, and special "Bigger is better" strategy card.

facing this fleet off with a Lumeris starter, which at least is a scout you would have

lumeris:

+10% fleet shields and hp
-40% dust ukpeep (thats -60 instead of -100 dust at the time for clarity)
Seeker
+40% fleet dmg
+ lots of movement and free movement bonuses
+ 80% hero ship shield absorption (again for clarity shield absorption was a negative value until recently =D)

Comparing these two your choice should be simple given you intend on fighting in space (which at least in MP you are almost inevitably going to have to do).
As a vodyani guardian is an insane fleet force multiplier making a good composition potentially undefeatable and thus rendering any system bonuses irrelevant as you will inevitably lose.

IMO it depends entirely on what you are going for.

when presented with the 3 choices, always take a look at the skill tree of each hero to see what they provide
be careful not to double click  as you might pick a hero you dont want (happend multiple times to me)

Guardians aren't always best on fleets and overseers aren't always best on system.

Always take a look at their skills then decide what you need or want most.

atleast thats how i do it.