I got asked a question on Twitter, and rather than limiting my reply to 280 characters, I'll share as much as I can on this page
A Reference Image is an Image that has been customized and Captured. This is also referred to as a "Build and Capture" because it is typically created in a Build and Capture Task Sequence, although it can be created manually through Audit Mode. A Reference Image MAY also contain installed Applications (Office, Runtimes), but this is not always the case.
Regardless of the method use, it must still be Captured (using PowerShell, DISM, ImageX, Ghost, etc). Additionally, Sysprep should be run on a system in this case, although this is not always the case
Here is Microsoft's take on this
When we use the term "Offline Servicing", we typically mean an Image that comes factory fresh from Microsoft that we mount, and apply the latest Microsoft Updates to. This includes adding Language Resources, or injecting files, even mounting the Registry to make cosmetic changes.
Since the Image is mounted, you cannot install Applications that rely on an EXE or MSI, although you can inject Packages like MSU, CAB, or Appx
You can mount a Reference Image and make changes, so you can Offline Service a Reference Image
You can download a clean ISO from Microsoft and call that your "Reference Image"
OSBuilder is a method of Offline Servicing "Uncaptured"
To be clear, the remainder of this document will consider a Reference Image "Captured" vs Offline Servicing "Uncaptured"
This is the biggest hurdle. You cannot use a Reference Image "Captured" when performing an Upgrade. This means that you cannot go from 1803 to 1809 with a Reference Image "Captured".
Offline Serviced "Uncaptured" is the only type of deployment that will work
Due to the fact you cannot perform a Windows 10 Upgrade with a Reference Image "Captured", you must also maintain a separate Offline Serviced "Uncaptured" for your upgrades
Why maintain two images if you can just use one?
A Reference Image "Captured" can contain applications like Offline or Runtimes, while an Offline Serviced "Uncaptured" image cannot. These will have to be added in a Task Sequence.
The downside for a Reference Image "Captured" is when Applications change, time to change the Reference Image "Captured", although if fully automated, then this may not be an issue
If you absolutely MUST have an application installed in the image, and not deployed, then you must use a Reference Image "Captured"
One problem that comes from using a Reference Image "Captured" is that you are now in "App Slavery". What this means is that changes in your applications may cause you to perform additional work. For example, if you have WinZip in your Image, and your company decides to move to 7-Zip. Now you have to either make a new Reference Image "Captured", or you have to spent time to perform an Uninstall of WinZip, and a new Install of 7-Zip.
Offline Serviced "Uncaptured" does not experience this problem since all Applications are installed at the time of deployment
Both are equally adept in handling Customizations, you just need to know how
One thing personally is the sheer amount of customizations in OSBuilder that can be done, including updating WinRE with DaRT and adding Drivers. I have YET to see a Build and Capture shared that handles this (it is possible, but I don't think anyone has realistically put the effort into this)
Consider this, if you have ALL your customizations sequenced in a Reference Image "Captured" Task Sequence, then this same configuration could be easily applied during the deployment of a Offline Serviced "Uncaptured" image
I tweeted a slide and was rather surprised at the amount of likes it received, so I'll bring this up again
Since you MUST have an Offline Serviced "Uncaptured" Image for Upgrades, it makes perfect sense to move as much as you can into the Offline Serviced "Uncaptured" Image. Then recycle this image to be used in a Reference Image "Captured". This saves time in your Reference Image "Captured" Task Sequence as some steps can already be completed
I'm busy. The fewer images I have to maintain, the better. It's not about being lazy, it is about using my time more efficiently. I already have to maintain an Offline Serviced "Uncaptured" image for Windows 10 Upgrades
If you deploy and maintain Windows 10, an Offline Serviced "Uncaptured" image is a REQUIREMENT, while a Reference Image is completely OPTIONAL
That being said, Reference Images do have a place, if necessary. I still use a Reference Image to deploy Windows 7 ...