Besides being closer are there any other advantages to staying on-site? This will be our first trip and there is so much that I don't know like how do character breakfasts/dinners work? How do you reserve them? How much are they etc.. I have a DS7 and a DD5
Take this response for what it is - MY OPINION.
We just returned from our 3rd family trip to WDW -- 2 of them we stayed off site, this time we stayed at Port Orleans, Riverside. OMG -- What a Difference it is staying on site!!!!!!!! If we can afford it, I'm going to make a stink to DH that we should ALWAYS stay on site for all future WDW trips.
Basic advantage to me is that you can turn it into an all-inclusive vacation..... this is something that means a lot to me since I'm always worried about how much I'm spending (which, of course, doesn't STOP me from spending lots of $$). We did the Deluxe Dining Plan and almost ALL of our food and drink were covered, including 7 character meals (reservations are a must for these). And we did PLENTY of eating.
Along those same lines, another advantage is that everything can be charged to the room from all the parks, Downtown Disney, tips for your meals, etc. That means that at the end of your vacation, you just have one final bill to pay, for any and all incidentals.
And the biggest difference: the Disney resorts think of EVERYTHING!!!!! The facilities are great, they provide transportation to everything Disney (and airport as well) for free (didn't take advantage of this since we have 3 kids in strollers/carseats so I don't know how good it really is) -- you name it, they've included it in their resorts!!!!!!
So, yes, if you can, I would suggest staying on site.
DH has added his 2-cents: He seems to agree that staying onsite is a great thing -- but he points out a couple of drawbacks -- the biggest is cost. If you look for it, you can easily find the same accomodations for a lot less $$ and can find a location with a lot more space if you stay off site. Also, you run the risk of getting Disney'ed out since everything has a Disney connotation to it onsite. The second is probably NOT a problem if you are on the DIS boards -- the first, well, with the deal they are offering now (buy 4 get 3 free), it's about as good a chance to experience the onsite for as reasonable price as possible.
Have a great vacation no matter where you choose to stay.