From an FAQ post I wrote a few years ago:
This may seem like an odd question, but it’s actually one I get very often. On my TeXtip twitter account, I include tips on how to create non-English characters such as using
\AAto produce Å. Every time someone will ask “Why not use XeTeX and just enter these characters?”
If you can “just enter” non-English characters, then you don’t need a tip. But a lot of people either don’t know how to do this or don’t have a convenient way to do so. Most English speakers only need to type foreign characters occasionally, and will find it easier, for example, to type
\ssthan to learn how to produce Å or ß from a keyboard. If you frequently need to enter Unicode characters, and know how to do so, then XeTeX is great.