I've really wondered that too: why is everyone recommending iterm? I'm glad it's just a matter of taste -- I'm perfectly happy with Terminal (and running a shell inside Emacs in my terminal :-).
iTerm has support for tiling terminal panes within a single window. You can drag any tab to subdivide a pane as much as you like.
It's handy for keeping "tail" or "watch" commands or similar visible — the same reasons people use tmux, tiling window managers, so on.
The UX isn't perfect, but it's useful enough that I've stuck with iTerm despite the lower performance (and bugs — it's pretty buggy, and the main author rarely seems to address Gitlab issues).
iTerm has other nice features. It can run without a title bar (saves space), it does cmd-click-to-open-file, and it has a lot of customization options. I don't really use most of the features; the tiling aspect is the main feature I rely on.
I love terminal panes. I'm not sure at this point what comes out of the box and what is custom configuration but I have keybindings for creating vertical and horizontal splits, and additional keybindings for navigating left/right/up/down.
My setup is to run MacVim on the left half of the monitor and then iTerm2 on the right half. iTerm is then split into generally three horizontal splits.
I love the deep aesthetic customization options (though they're really non-essential)
I love the tmux integration, I used tmux before anyway and it's honestly not that different if you used tmux's built in mouse support but focus follows mouse in terminal panes is a nice touch.
Displaying images inline is alright I guess but I don't actually use it that much.
There's a bunch of stuff listed on their features page that sound useful but I don't actually use (yet). Idk I suppose I haven't noticed any appreciable difference in speed.
Good to see these replies here because I've always thought I was crazy. A new bump would come out, I'd try it again, and immediately feel it was too slow before going back to Terminal.app almost immediately.
It's a matter of taste in that both have features that the other doesn't have (terminal being faster being it's main, but significant one).
As far as I know, in terminal you can't use cmd as meta key, which immediately kills it for me as an emacs user (furthermore in iterm2 you can set it up so that left cmd = meta, right cmd = cmd, which I find very useful).
You sure can (I assume you meant opt), and have been able to since the NeXT days. There are many Emacs users at Apple (look at the Emacs key bindings in the text widgets)
For me it allows me to make my terminal minimal or dare I say, downright beautiful, which is something I definitely cannot say for any of the other terminal emulators out there, save for a few newcomer Electron-based abominations like Hyper.
For me it's a relatively trivial reason: my muscle memory has been trained over the years that cmd-[1-9] switches tabs, and there's no way to configure that in Terminal.app (last time I checked) without unstable SIMBL plugins.
