Distributed elements, in any sector, have their basic benefits and drawbacks compared to a single large tool. It is similar to the preference of using small aircraft over a jumbo 747 for carrying passengers between proximate airfields or to using a bus vs. multiple private cars to move a football team around.
In networking, the analysis between a Virtual Modular Switch (VMS) and a Modular switch is cost and performance driven. A network facilitator will prefer a solution that gets the job done at the lowest cost. Such an analysis will produce different results based on the cluster’s size. If the number of network ports required for the solution can be fitted into a single chassis based device, this means that the use of the chassis, although equipped with redundant peripheral elements such as fans and power units, is presenting a single point of failure in the network. In order to solve this, a second chassis is introduced for sharing the load and provide connectivity in case of chassis failure.
From a financial point of view, assuming you had a chassis of 1000 ports in full use, you need to deploy a solution of 2000 ports for high availability purposes which means a 100% price increase. Using 2/3 of the ports in the chassis will translate to 200% increase on top of the real required investment and more such examples are easy to find. Other problem with the chassis is that it comes in very few form factors so if your solution requires 501 ports while the chassis of choice supports 500, you need to add another and pay the double cost.
Alternatively, breaking the solution into multiple devices in a VMS gives both improved granularity in terms of port count and high availability in terms of impact from failure. In loose terms, if the VMS consists of 20 switches, the failure of a switch translates to 5% loss of network capacity. Regardless from how powerful and complicated the chassis is, this is a classic case where the strength of many tops the strength of one.