Why u should work with the source code depends on your goals.
Some people use it to customize it, others for debugging, others for having the extra’s …
Keep in mind if u modify the engine source code and there are updates, u might run into issues (source control merging conflicts)
With the source code u can do about the same as u do with the launcher installed version (this one also contains the source code … see Program Files/Epic Games)
In the launcher installed version, some things are not available to reduce install size (server build, full debug build …)
U could also disable modules u dont need …
If u search the wiki, enough tutorials on how to use the engine version, but it’s simple
Download source
Run Setup.Bat
Run GenerateProjectFiles.bat
right click your project “.uproject” file and choose select engine version
Here is sample why engine source can be usefull (or at least why im using it)
In the installer version u have DebugGame build in visual studio which not allow stepping trough engine source code for debugging.
Source code version has a Debug target which does allow
Source code version has Server builds, which is required for building dedicated server.
I use the installer version on my dev pc cause compile times are bit better.
Only when i run into issues i need to debug and step trough engine source to see whats happening behind my code i switch to source version.
On my build machines i only use source version cause they create the release builds which include dedicated server.