1. Viewing a playback of how the candidate coded the question.
Even a bad candidate might be able to 'prettify' his final code (or even craftily cut and paste code while solving the problem).
However, it is almost impossible to do so in a playback of the entire coding process.
It is like the difference in complexity between creating a fake photo vs creating a fake video !
2. Adaptive testing
Depending on the performance of the candidate, the questions presented will increase or decrease in difficulty - allowing the system to accurately assess the candidate's skill level (that is the advantage of using several small questions, as opposed to a few large questions).
3. The ability to embed the testing widget both on your website or even on a job posting on a job site - that way candidates never even have to leave your website.