Site Template vs Site Definition

Site Definition Advantage:

• Data is stored directly on the Web servers, so performance is typically better.
• A higher level of list customization is possible through direct editing of a various XML files.
• Certain kinds of customization to sites or lists can only be done with site definitions, such as introducing new file types, defining view styles, or modifying the drop-down Edit menu.

Site definition Disadvantages:

• Customization of site definition requires more effort than creating custom templates. ( Not a big difference in effort if planning is proper )
• Users cannot apply a SharePoint theme through a site definition.
• Users cannot create two lists of the same type with different default content.
• Customizing site definitions requires access to the file system of the front-end Web server.

Site Templates Advantages:

• Site templates are easy to create.
• Almost anything that can be done in the user interface can be preserved in the template.
• Site templates can be modified without affecting existing sites that have been created from the templates.
• Site templates are easy to deploy (Basically just a file upload).

Site Template Disadvantages:

• Site templates are not created in a development environment.
• They are less efficient in large-scale environments, not very easy to move them across various environments.
• If the site definition on which the custom template is based does not exist on the front-end server or servers, the custom template will not work. The reason is that Site Template is a delta file applied on an existing Site Definition.