This question is related to this one, but the author of the most voted answer seems to no longer have an account here so I'll open a new question instead of commenting on their answer.
I originally thought that counter-term renormalization and Wilsonian renormalization have two different objectives. Counter-term renormalization varies the cutoff scale $\Lambda$ but not the renormalization scale $\mu$, whereas Wilsonian renormalization varies $\mu$ but not $\Lambda$. Thus any attempt to compare them is conflating $\mu$ and $\Lambda$. But the answer to the linked question says:
In counterterm renormalization, you are essentially studying Wilsonian renormalization, but with the intention of sending the cutoff to infinity at the end
which suggests there is a connection.
In Wilsonian renormalization we start with a theory far in the UV (possibly at the continuum) and integrate out high momentum modes until we reach our renormalization scale. The result will be an effective Lagrangian where parameter values may have changed and new terms may have been added/removed. In summary, $\mu$ goes from the UV towards the IR.
On the other hand, in counter-term renormalization (as in renormalized perturbation theory) we first fix $\Lambda$ and $\mu$ and find Lagrangian parameters so that predictable observables (such as the mass) agree with their experimental values at scale $\mu$. Part of this renormalization process will require defining counter-terms and finding their values. Once this is done we try to take a $\Lambda \rightarrow \infty $ limit. Here $\Lambda$ go from the IR to the UV.
In trying to relate the two I noticed that they appear to be inverses of one another except one has to do with $\Lambda$ and the other has to do with $\mu$: one starts with a continuum or small scale theory and eventually gets to the scale one is interested in, in the other one starts at the scale of interest and tries to recover the small scale or continuum theory. Are they in any way inverses of the same procedure? If so, I have two further questions.
First, the renormalization group flow is not always invertible which is due to the fact that we cannot recover lost information. However, if there is a connection between the two, it seems in counter-term renormalization we are doing exactly that, we are somehow getting information on small scales from large scale behavior. Isn't this a problem? Or does counter-term renormalization give you no information about scales other than $\mu$?
Second, while going along the the renormalization group flow one picks up and loses all kinds of interactions that were not present in the original Lagrangian. In counter-term renormalization such terms do not appear and only has the terms that one starts with. Is this because we change $\Lambda$ and not $\mu$?
Another perspective is provided by this answer which says
- the renormalized Lagrangian is the Wilsonian effective Lagrangian
- the bare Lagrangian is the fundamental Lagrangian
- the counterterm is the term needed to compensate for the RG flow between them