I posted a thread on my Cotoneaster elsewhere by the way. Basically, the root system fills the small container quickly and some roots escape into the larger container. This container could have as much as 20 times the volume of the small container the tree is planted in. The free draining media in the large container will allow for lots of root growth, while the root system in the small container still has a root system (most importantly that is watered more regularly). This is mainly used for shohin sized trees, but I've seen it used for medium sized cascade style bonsai as well. The small pot should be anchored in the larger container with rubber bands, twine, etc. until it roots into the larger container well. If you want to show the tree or change containers, just cut the root system back to base of small container. Some people do not use drainage mesh inside the small container. I've found that those that had mesh put in had more thinned roots that invade the larger container. I will try and find a photo of one.
The photos in the next post below are of a medium sized Pyracantha. The goal was to continue thickening the trunk and also keep it from drying out too fast. This is a good technique if you don't have a lot of space or don't have a lot of time to water your smaller bonsai.
To answer your question, I don't think that it is better. Both have their merits. It is my opinion that this method doesn't create massive surface roots (too thick). You can control the amount of water the plant receives and potentially increase fertilization rates. As stated before, this is great for small trees and you can move them around. Some swear by in-ground growing and I've observed both good and bad results from it.