With a traditional speaker, the point where your brain perceives the tweeter's location and the point at where you perceive the midrange driver's location is slightly different - one is typically higher than the other. With a good coaxial (like KEF or Tannoy) that issue is eliminated and the sound of the tweeter and midrange originate from exactly the same location. Whether you are standing, sitting, or lying on the floor, the acoustic center of a coaxial driver remains identical. This acoustic center issue can also be resolved for a fixes vertical listening position with a MTM design, similar to my speakers. As long as you are seated such that your ears are directly between the midrange drivers in an MTM, the acoustic center will appear to be the tweeter in the middle. But if you stand up or lie on the floor that illusion falls apart.
Another issue is crossover design and driver output overlap. Again, it is all about dispersion into the room. You can tune a crossover perfectly for a fixed listening position where the tweeter and midrange are placed anywhere close to each other. You can even align the phase and such so they sound amazing together from that single fixed listening location. However, with traditional speakers with separate tweeters from midranges, moving from the ideal target listening position will cause all that tuning to be knocked out of alignment because the distance between the tweeter and your ear and the distance between the midrange and your ear will start to differ from each other, or the target ideal tuning distances. So, moving around the room will alter the sound and the acoustic reflections will not have the same timber in the crossover range. With a good coaxial like those from KEF and Tannoy you don't get that problem as you move around the room.
There are other benefits as well.
There are also some disadvantages to coaxials, such as the inability to easily mix and match midranges and tweeters and a redesign in the tweeter alone requires a redesign of the entire coaxial speaker. There are also some serious engineering and manufacturing complications with making high quality coaxials that can significant raise the costs. Also, with a dome based tweeter in a coaxial driver where the tweeter is deep in the cone of the midrange, the movement of the midrange cone can cause doppler distortion from the tweeter's acoustic output. The cone is acting like a wave guide for the tweeter - which also has its potential issues with off axis performance and such.
