In my experience an ideal practice session is split into two halves: exercising and performing. Let me explain what I mean.
Exercising focuses on the physical aspect of guitar playing. Training our bodies to the act of playing. It starts out with warm-up, and using the Exercise Setup, I concentrate on mechanical exercises that improve or expand my skills.
Performing, on the other hand, focuses on applying physical skills to actual musicmaking. More rehearsing than exercising. This is when I run through songs and practice improvising. I ditch the Exercise Setup and instead set everything up the way I’d do if I were playing a gig.
Broken up this way, you see how each side relates to one another. Let’s say you’re practicing blues and want to incorporate a killer bend-and-shake (vibrato while bending a note — it’s hard!). You’ll acquire it more quickly if you just exercise that skill in isolation. But it’s also important you rehearse how to use the skill in the context of real music. You have to connect the dots between a technique and what it expresses, so that you employ it to say something with your playing. Bend-and-shake is great, for example, to convey passion and intensity. It’ll sound silly, though, on subtle and intimate moments. Shaking wildly on every bent note is simply a habit, not an expression. You don’t have a true command of the technique — you can do it, yes, but you’re enslaved to your body doing it out of habit. Learning when and how to deploy it to express something is the key.
Now, with my practice time being limited, it’s hard to spend enough time dedicated to each side. For me right now I focus on exercising more, just because I still feel the need to solidify my fundamental technique. But for others, it may be the opposite. Have you ever seen a guitarist who has great chops but really doesn’t know how to use them musically? Such a person should practice performing more.
This is the ideal, you don’t have to cover everything in every practice session. But I find that by keeping these two aspects in mind and focusing on one at a time, it helps me be efficient and get better faster. Try it, and let me know how it applies to your situation.