Ingame cutscenes uses real time rendering and its performance depends on the players’ GPU. The advantage of this is you can have a seamless transition from your game to cinematics mode and vice-versa.
Pre-rendered cutscenes are generally movie files that you playback at some point. One advantage of it is you can have infinite game objects or particle effects going on and not suffer any performance penalty on playback. But then you have to render/bake your scene to production which may take a long time depending on how complex your movie is. Also no seamless transition to gameplay. FFVII on PS1 is a good example of this.
You can also convert your ingame cutscenes to movies/pre-rendered cutscenes for performance reason at a cost of losing the seamless transition.
As for which one is better is up to your preference. Making them can have a very different workflow depends on your goal. I personally think realtime cutscenes are easier since UE4 now has a built in sequencer. Plus you can always convert them to movies later on.