Only that you don't have to setup IIS. Setting up IIS in most cases is
straightforward but sometimes may turn to be a headache. I may want to avoid
IIS also for security reasons if you don't want to care about limiting
access to your computer.

Sometimes you have to use IIS. An example is if you need to create a virtual
directory on your site that will point to some location outside of your
site. I don't know how it can be done with the development server.

Maybe this will help:

<http://msdn2.microsoft.com/en-us/library/58wxa9w5(VS.80).aspx>

You don't have to install IIS. That is pretty much it.

It is also a bit easier, as you do not have to type in
http://localhost/{SiteName} when you create a site, as it can go on the
default directory.

BTW, you can work with both at the same time. Create a file based web site
in one instance of VS. Then, open Windows Explorer, right click the
directory and go to the web sharing tab and share it. Now, open a website
via http://localhost/{SiteName} in another instance. Same site, two ways.

Would I do the above in real life? Only to illustrate that it can be done.

I, personally, do everything in IIS. Not quite true. When speaking, I will
sometimes create a file based web, as I can share it easier (primarily
zipping it up without having it under Inetpub). As I can switch it to IIS at
any time, it is not an issue.

Not sure. If you want to see how it works, or at least how a previous
incarnation worked, look up Cassini. You can download it from here:
http://www.asp.net/downloads/archived/cassini/

Cassini was the original file based server for ASP.NET before it was
included with VS.

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