1) Early morning entry and E nights.
2) Guaranteed entry into parks in high season, when parks can close to non-guests for capacity.
3) Disney Transportation. Off-site hotel shuttles may only run 2 to 4 times a day. You have to go on THEIR schedule. Disney's busses and monorail run all day until well after park closing.
4) Package delivery to your hotel. Husband's everywhere have been saved from becoming pack mules.
5) Proximity to hotel if kids are tired/sick/upset. Or even if the adults are!
6) Disney quality. Many fine off-site hotels, but Disney resorts are almost 100% guaranteed to be friendly, clean and well maintained.
7) Free parking at all parks (if you have a car).
8) Resort activities. At CR, you can rent all sorts of watercraft. GF has a spa. Ft. Wilderness has a petting zoo and pony/horse-back rides. CR has Chef Mickey's (charactor meal buffet) GF has High Tea, and Ft. Wilderness has the Hoop De Doo Review (dinner show, very fun!) and Poly has the Luau, though that's only gotten so-so reviews I think.
10) And most importantly, atmosphere. It's hard to explain, but there is something, well, magical about staying at a Disney Resort on site. The real world melts away, and time seems to stop. It's so quiet-which seems strange for a place over run with kids, but once away from the pool, it's just so peacefull!
The drawbacks are few, but to some are important.
1) Small rooms, max 4 occupancy except for Boardwalk and Port Orleans, both have trundles for a 5th (small) child. Some deluxes may also offer sofa beds, but deluxe resorts are more expensive. If you have 6 or more, you have to get a villa (mucho $$$) or two rooms, also more expensive.
2) Food expense. Disney food ain't cheap!
3) Hotel expense. Disney hotels tend to be more expensive than simular (or even better) accomodations elsewhere.
4) Without a car, you're POD--Prisoner of Disney. There's no escape 'till you ride back to the airport picks you up!
Overall, I feel most families are better off on-site, unless money is so tight that the only way to go to WDW is to stay off-site.