It's a little of both. You don't want to describe every aspect of the character's appearance, because in 99% of cases it'll sound unnatural and immersion-breaking no matter how you try to do it. Most things can just be left up to the reader's imagination.
However, you want to at least mention one or two major features of every important character, enough for the reader to recognize them. Like, imagine that the character doesn't have a name, and you need to spend the whole story referring to them by a short-but-unique title, like the Dark Haired Man, or The Hooded Girl. That's your absolute minimum.
Then you add from there based on your narrative style, and the relative importance of the character in question. A very minor character who will only exist for one story beat could just be The Hooded Girl with no other descriptors, and it'd be fine. Plus, a lack of description is a subtle signal to the reader that this character isn't someone they need to worry about (for the moment~).