I think my opinion is pretty unbiased since we tend to do our trips about 50/50 - half of them have been on-site, and half have been off-site. There are tons of pros and cons that have been brought up here already (price, amount of room, transportation, ability to add the dining plan, extra magic hours, etc.). That being said, at the end of the day, I would never in a million years say that my off-site trips were "less magical" than on-site ones. The Disney magic is what you make it.
Our final decision is always driving - if we're not driving down and don't want to rent a car then we definitely stay on property due to the free and regular transportation. It has absolutely nothing to do with the magic of the properties. Not to sound overly cheesy or anything, but that Disney magic is in
you, not in some hotel or resort.