The Deluxe have the best soft goods: better beds, towels, linens, and toilet paper in the rooms. They also have extra touches like valet parking (at an extra cost), multiple table service restaurants, interior hallways to reach the rooms. They also are most likely to have transportation options other than buses (other than AKL). Location wise, they are each near at least 1 park (2 parks for the Crescent lake hotels), which is convenient as long as you are going to that 1 park (or 2). Each has a counter service food option but they are generally tiny (with the assumption that if you paid that much for a room, you want a table service meal or will be going to a park to eat.) I would not call these luxury hotels (especially in terms of bedding), but they are the most upscale at Disney.
You didn't ask about the DVC resorts. These have a large variation in terms of location, theme, restaurants, and architecture (some have rooms accessed from interior hallways while others have exterior halls). I have not tried any of these.
The moderate hotels are really in the middle. The have exterior hallways, and are very spread out (except for Port Orleans French Quarter) so be prepared to either drive around in your own car or take long walks. There is only one table service restaurant and it is only open for dinner. There is a moderate sized food court. The rooms are being updated to have (mostly) two queen beds vs. the original two doubles. The rooms are moderately upscale in terms of decor, with glass drinking glasses, fridge and coffee maker. You can pay extra for a king bed or a themed room (pirate, or princess/royalty). Transportation is via bus, although the 2 Port Orleans hotels have boat access to Downtown Disney in the evening.
The value hotels are truly basic. They are smallish rooms, but about 50% bigger than a cruise ship standard cabin (for comparison). Rooms have 2 double beds, except for the handicap rooms with a single king. Each hotel has its own unique theme, but these hotels have been standardized and toned down in decor over the years. The beds, sheets, and towels are serviceable but feel cheap. There is only a food court for meals (although they are the largest counter service restaurants with the widest selection of foods of any WDW hotel counter service locations). All transportation is via bus, hotel bus stops are uncovered (they are covered at other hotels at least partially), and at the parks, these hotels have the stops the longest walk from the park entrance/exit. (This is least bad at the Magic Kingdom and worst at Epcot.) The rooms are often noisy, but not terrible. Rooms lack the fridges and coffee makers provided in other rooms.
All the hotels share Disney transport (so you don't need to drive your own car if you don't want to and/or if you don't like the parking trams at the park). You have access to extra magic hours, you can charge purchases/dining to your room, you can buy the dining plan (if that is useful to you), there are evening free activities like movies, and daytime poolside activities. You get a few Disney themed tv channels, no pay-per-view and no mini-bars to tempt you or your children.
In general, off-site hotels have bigger rooms and may have nicer furnishings. Most charge for parking although some provide free breakfast.
In the end, you are paying for theme and location. If you stay on-site, pick the price point you can afford and the theme you enjoy. Stay off-site if you want to stick with a chain, or want a less expensive suite, or house. The value resorts are the most "cartoon-like" in theme, while the moderate and deluxe are more grown-up in theme.
An on-site value hotel is likely similar in price or cheaper than many off-site hotels. They may not be as fancy, but you get more theme and a better location.
The deluxe are certainly the fanciest, but the moderates are certainly nice as well. In the end, what you like matters more than what I say here.
