What are the benefits of a MSI installer over a standard setup.exe?

The most important thing to understand is that MSI is meant to be a benefit to customers not vendors. The ability of a SysAdmin to be able to examine the MSI to know what it will do to their machine and the ability to transform/tailor said behavior to their unique needs is priceless. Add in the standardized logging, command line behavior, transactional nature and so on and you can begin to understand why (despite it's various limitations ) MSI is so valuable.

Below are a few MSI benefits (taken from this link):

• Can be advertised. So that on demand installation could take place.
• Like advertisement, features can be installed as soon as the user tries to them.
• State management is maintained so Windows Installer provides an a way to let administrators see if an application is installed on a machine.
• Ability to rollback if an installation fails.