Site Definitions vs Template in Sharepoint

Customization of site definitions holds the following advantages over custom templates:

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 SCHEMA.XML file.
Certain kinds of customization to sites or lists require use of site definitions, such as introducing new file types, defining view styles, or modifying the drop-down Edit menu.
Site definition disadvantages include the following:

Customization of site definition requires more effort than creating custom templates.
It is difficult to edit a site definition after it has been deployed.
Doing anything other than adding code can break existing sites.
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.
Custom templates hold the following advantages over customization of site definitions:

Custom templates are easy to create.
Almost anything that can be done in the user interface can be preserved in the template.
Custom templates can be modified without affecting existing sites that have been created from the templates.
Custom templates are easy to deploy.
Custom template disadvantages include the following:

Custom templates are not created in a development environment.
They are less efficient in large-scale 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.