I've now visited WDW six times as a "grown up." Three have been offsite in private pool homes/townhomes. Three have been onsite in DVC villas (not studios). All but one of those trips included my two kids the other was a "grown up getaway" using a bonus timeshare week at Old Key West. Other than the trip without the kids, where we let Disney do the driving, we've always had a rental car.
We simply cannot have the four of us stay in a single hotel room for a week---we really prefer to have more space than that. Even a 1BR is a bit cramped for the four of us---doable, but not ideal. A 2BR for the four of us, or a 1BR for the two of us, is ideal---it gives everyone private sleeping space, but allows for common space for early risers/late sleepers to hang out in without disturbing anyone else.
We really like having a kitchen available to us for breakfasts. We also might make one or two simple meals of pasta, hot dogs, etc. if we aren't up for the parks that evening. It's nice to have a "home" to hang out in, rather than a "room." Likewise, it is very convenient to have an in-unit washer/dryer. We can pack light, and we don't have to worry too much about every possible contingency.
Comparing the two, we find the differences to be relatively subtle. We usually have a car, but do take the bus system as well---we usually take the bus to the Magic Kingdom, and we often take the bus to Epcot in the evening so that both the grown-ups can have an adult BEvERage or two. It's also nice in the rare instances that we have to split up for one reason or another.
We don't ever seem to go to Extra Magic Hour---even when we plan to, plans seem to change. The various dining plans are not good fits for us. We enjoy the relative isolation from the outside world---unless we need to visit it for some reason (i.e.: a quick trip to the pharmacy, etc.) and then it can be a pain to "get out". We find the service and unit quality at the Disney loactions to be very comparable to those outside the world---both are good, but neither is perfect.
When we are able to obtain onsite DVC villa stays at a cost competitive with offsite locations, we take them. When we can't, we are more than happy to stay offsite. For our family, the cost difference is too high for the value it brings. Others will make different choices, of course, and that's why Baskin Robins has 31 flavors.