Short answer: Money
Much, much longer answer:
First, I've stayed off site and on. There are definitely advantages and disadvantages to both.
When you stay on-site, you are paying a little (or a lot) more for what is in theory a worry-free vacation. No need to cook or drive. You just let Disney do it all.
We put this to the test on our last trip (which we just returned from). The big problem we encountered was the bus service at Port Orleans. It was woefully inadequate. I quickly found myself wishing I had rented a car.
But once you make the leap into renting a car, suddenly staying off site starts to make a lot of sense. You can save a lot on food just by eating at restaurants off site. If you have even a minimal kitchen (fridge and a microwave) you can save a lot of money by eating a few meals at the hotel. And if you're willing to actually cook a few meals, you can save a fortune.
Obviously, you get more bang for your buck in terms of accomodations when you stay off site. For the price of a moderate, you can get an entire vacation home or a suite somewhere. If you're traveling with more than 4 people, it's hard to fit in those tiny Disney rooms.
So what are you giving up? Convenience? Not really. With a car, I can usually make it to the parks faster when I stay off site than when I stay on property and rely on Disney transportation. And I don't have to stand while juggling a baby, stroller and bags of souveniers/supplies.
When I stay off site, the commute to and from the parks is usually shorter than the wait for a bus. And I never have to worry about buses filling up. Every time we left DHS this trip, we were on a standing-room-only bus. Usually the second or even third bus. And we never stayed for Fantasmic! We left before the park even closed.
One day when we had early reservations at the castle, we watched at least three buses each for DHS, Epcot and AK come and go before a bus showed up for MK.
The driver told us he was actually assigned to DTD but got called in to help with the PO-MK route. Thank goodness for that! We were 10 minutes late for our ressies, but it could have been so much worse. Let me tell you, that was not a stress-free vacation experience!
EMHs? We avoid these like the plague. It's just a guarantee that the park hosting the EMH is going to be uncomfortably packed. I can got to a park without EMH and make better use of my time during normal operating hours.
Admittedly, you give up being immersed in the Disney experience 24/7. I value that. But not everyone does. My wife would much prefer a bigger, nicer room with no theme. After a week on those tiny, uncomfortable PO beds, I'm inclined to agree with her!
Honestly, I'll have a hard time ever justifying staying on property again unless I hear that the bus situation and on-site dining have been greatly improved. As it stands, Disney is giving me every reason to stay off site and very little reason to stay on property.
Seriously Disney, your bus service is costing you money.