It's a valid question, and one I've fielded more than once. Even discounting the teeth-grating bastardization of the honorable term "roleplaying game" by computer companies wanting to make their console shoot-em-ups sound cooler, I've played most of the variants: MMORPGs, LARPs, storygames, free form, what have you. I've played them a LOT: I played the same MMORPG character through various iterations for twenty-one years (seriously) and the same LARP character for fourteen.
My take is that no one style is "better" than the others: they're just different. But since this is a tabletop blog, I'll post the comparison I did on a board some years ago:
1) Tabletop is nimble: If I need to clarify a
rule, I can do it. If I need to invent detail, I can invent it. If I
need to change anything I please, I can do that too. And I do all of that in moments.
I don't have to have a team of coders spend six months on it and have
the proposed changes pass QC and a dozen sticky hands, and I don't have
to pass the changes through a LARP organization's headquarters, annual
rules review or a consensus of a half-dozen GMs.
2) Tabletop is responsive: The GM-to-player ratio is far higher
in tabletop than with LARPs, and infinitely higher than it is with
MMORPGs. I have just a few players in my group, and I not only can give a
great deal of relative attention to individuals, I'm not restricted to
doing so on game days. Want to work out some details or interactions in
e-mail or in IMs? Sure. Want to have personalized items? Sheesh,
then hit up your local craftsman and place the order ... you don't have
to wait for three-times annual merchant festivals and hope against hope
you get a place in line, or reach Xth level and get the predetermined
Xth Level bennie.
3) Tabletop can be broad-based: In a MMORPG, and to a lesser
extent in a LARP, the milieu is fixed in granite: you're playing in the
Preset World, in the Preset Area, and it's damnably difficult to change
any of that, if it can be done at all. In tabletop, if my players want
to shake off the dust of Warwik City, buy a ship and take up
privateering, they can do that. (In fact, a group did that.)
4) Tabletop can be more freeform: Most MMORPGs work on a
D&D-ish system with a limited palette of character classes and
races. While a lot of tabletop campaigns work the same way, point-buy
systems are out there where you can pick what you want and negotiate
options and exceptions, things that are impossible to do in MMORPGs and
often provoke screams of "special treatment!" in LARPs.
5) Tabletop can be less competitive: This might seem
counterintuitive, but LARPs and MMORPGs are generally free-for-all PvP
environments where the principal threat comes from other players,
bragging rights over level and Kewl Itemz is immense, character
advancement is often a zero-sum business where another player's gain only
establishes him as a greater potential threat to you, and the role of a GM is more traffic cop and enforcer than game-enabler. Tabletop parties
are also usually much closer together in power level, so a latecomer
isn't automatically the punching bag of any powerful oldbie who wants to slap
6) Tabletop is richer: It's very difficult in LARPs, and
impossible in MMORPGs, for detail to be created in the same ballpark as
in tabletop. I can make my descriptions for sites, NPCs, objects and
events as lavish as I please, and since I'm not working with a visual
medium, I don't have to back those descriptions up with the art or prop
7) Tabletop can be crunchier: Complex, intricate, detailed
rules are the death of LARPs, which function best lean and mean (and
which far more than with other RPGs depend on all of the players knowing
all of the rules), and don't work well in MMORPGs, where they require
exponentially more coding time.
8) Tabletop is cheaper! Almost any MMORPG worth playing is fee-based or requires a buy-in of software. The LARPs I've been in had at-the-door fees to defray the costs of props and land rental. You don't need to buy anything in order to play tabletop.
There are a few more, but that'll do for openers.