Research by the Journal of the American Medical Association Pediatrics analysed three years of data from more than 100,000 Australian children spanning years four to 12, with a focus on after-school trends.
It found adolescents reporting moderate use of social media generally had the "most favourable wellbeing profiles".
Both non-users and those on social media at the highest levels were at elevated risk for poorer wellbeing.
"The results of this study highlight a nonlinear, u-shaped association between social media use and wellbeing," the report found.
"This ... study provides compelling evidence that high social media use was consistently associated with poorer wellbeing."
For younger girls between grades four to six, wellbeing was highest with no use, but from middle adolescence and older, moderate use was most advantageous.
In boys, non-use became increasingly associated with poorer outcomes the older they became from mid-adolescence.
"These associations highlight that both abstinence and heavy use can be problematic and that the impact of social media is contingent on age and sex," the report reads.
It recommends public health measures move from simple time-based limits to promotion of balanced and "purposeful" digital engagement as part of a broader strategy.
Since Australia's world-leading social media ban for under-16s took effect last December, more than half a million accounts have been removed from Facebook, Instagram and Threads.
Meta, which owns the three platforms, said it had removed 544,052 accounts belonging to children in a compliance update a month after the age restrictions kicked in.
Meta reported it took down 330,639 Instagram accounts, 173,497 Facebook accounts, and 39,916 Threads accounts between December 4 and 11.
Tech companies face fines of up to $49.5 million if they fail to take "reasonable steps" to remove under-16 users from their platforms.
The federal government has warned it will be asking for regular updates from the companies to ensure compliance.
Children are also banned from using platforms including TikTok, Snapchat, X, Reddit, Kick, and YouTube.
Labor has repeatedly said the onus is on tech giants to detect and deactivate accounts, with parents off the hook.
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