The best way to do any backup is the simplest way to do that backup. Complexity brings, well, complexity. But, along with complexity comes cost and risk that things could go wrong. So, server-free backup is more complicated than other forms of backup. Therefore, it should only be used when it is really necessary.
The types of environments that tend to move toward server-free are environments that have a very large data set behind an individual server. Very large is relative, but we're definitely using the word terabyte in a plural sense at this point, and the load on that individual server is too much. So, you want to move that IO load off the server and onto something else -- either a dedicated server or the disk hardware itself.
Check out the entire Server-free Backup FAQ.