Basically that password managers

(a) store the passwords encrypted and require a master key to see them

(b) generate random, long, secure passwords for you

(c) allow you to group passwords in folders and subfolders

...

One big difference is that a password manager like 1Password (and I would presume others that integrate similarly with the browser) won't enter a password unless you are at the correct site. This provides some pretty good protection against most phishing attempts.

Spreadsheet file's open to anyone who gets access to your computer, including forgetting to lock it at lunchtime and while it's sitting at the PC repairshop after the fan's gone.

Also you can carry around an encrypted password manager file on a usb stick without having to really worry about losing the stick.