We have had Betfair in the UK for 18 years now. Here's a general observation:
Value
There is no doubt that the prices you can get are better value. Books are around 3%, which is much better than bookmaker SP (starting price) and way much better than our Tote (with it's crazy 19.25% track take).
Advantages
You can take a fixed price. You can back a horse at 3.50 (2.5/1) and that is what you will get paid out on even if the horse steams into 2.10 (1.1/1). Of course the horse could drift and you lose out but generally winners would tend to shorten not drift.
You can back multiple horses in the same race and instantly see your position.
You can lay horses to lose. If you think a hot favourite can not win from a poor stall position, or if the jockey is a chump, or the trainer has targeted the wrong race you can get some great value in beating the crowd and laying a horse.
You can back in-running. After the off your horse may go up or down in price and you can stake accordingly to "green up" and guarantee a profit.
e.g. You think a horse will run a good early speed but fade in the last furlong. You can back it at 25.00 at $15 and then put up a lay bet for 10.00 at $20.00. If both bets are matched you are guaranteed a profit regardless if the horse wins or loses.
Disadvantages
Unscrupulous owners and trainers use the exchanges. You may find that an overlay is just too generous and you have no chance of winning from backing it.
You have to pay a starting rate of ~5% commission. This is ontop of the 1-4% over-round. It is true that the more you bet the less commission you will pay but there is a tipping point, in which you may start to get hit with a punitive premium charge.
The site is addictive and you can get into hell of a mess chasing your tail. The fact that you can back, and then lay, and back another horse, and then lay it and a few more others, and then do the same in-running can make you lose your sense of betting reality. It's a typical punters ruin - offering many outcomes; insurance; wuss bets.
Summary
Betfair exchange is a great betting medium for the serious punter - especially those that have been banned from sportsbooks. You are effectively trading against thousands of punters and Betfair just take a small percentage (big percentage if you are in premium charge zone). Those thousands of punters *will* be mug punters so you can get a good edge.
Never forget that there are modern day Benters who have servers within Betfair's premises. They have servers that are constanly scalping prices, and Betfair themselves have teams of programmers constanly scalping prices. There are also dozens of dodgy trainers and hundreds of dodgy racehorse owners who are cheating the prices.
But never forget that with all the technological and shenanigan forces that are out to take your money there are thousands of punters who are clueless, or have the wrong opinion and their back and lay offers are ripe for the picking.
Betfair
