- The advantage is performance. The sim has no work to do except draw that base mesh as fast as possible.
- The disadvantage is flexibility. The sim has no easy way to modify that base mesh.
If you want to compare X-Plane to a first person shooter, consider the "cost" of overlays as one of the reasons why FPS games appear to be higher performance than general purpose flight simulators like X-Plane and MSFS. In a FPS, each level is likely to be fully baked, with only one level loaded at a time. This is equivalent to X-Plane's DSF base mesh. The FPS game doesn't need to manage overlays that are put together at runtime in unpredictable combinations, and this lets the FPS engine optimize for performance.
(In fact, the FPS engine might be able to optimize a second way, if third party level packs are not available. Not only can a level be 'fully baked', but it can be fully baked specifically for that particular rendering engine. By comparison, a DSF base mesh will run with X-Plane 8 or 9 - clearly it isn't specifically optimized for just one version of X-Plane.)
If you look at the scenery system "overview" I wrote around the time of X-Plane 8's release (this overview is now pretty out of date; I really need to update it) you'll see this:
There are now two scenery formats - one for editing and one for distributing scenery. Both are new.DSF stands for "distribution scenery file" - the idea is that DSF was meant to be a container for fully baked finished scenery, optimized for small size on DSF and fast loading, but not editing. Our internal tools use another file formatm ".xes" to contain imported global scenery data before it is baked. Originally I thought that we would provide an editor to .xes files, but that has not happened. With MeshTool, you provide input data in more common public formats like SRTM HGT or GeoTiff, and .shp (shapefiles). You can think of .shp and .tif as the editing formats for MeshTool and base DSFs.
So how do we make it easy for users to edit scenery? I believe OpenStreetMap is the answer. The common request we get from users is for a way to edit the vector source data for global scenery (or sometimes, the request is to edit the features created by vector data). In other words: how does a user edit the coastlines, water bodies, and roads? With OpenStreetMap, OSM itself becomes the "editing" format for X-Plane scenery with DSF as the final result of baking.