Almost everything a game developer wants has a deep and sophisticated tool waiting for them in UE4. No external plugins are needed to make powerful materials, FX, terrain, cinematics, gameplay logic, AI, animation graphs, post process effects, lighting etc.

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Pro
Free development license, including source code

The engine, including full access to source code, is licensed to developers for 5% royalty on resulting revenue if it exceeds $3000 per quarter.

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Pro
A visual scripting system for non-coders enables quick prototyping

Blueprints are authoring tools designed for non programmers so designers and other team members can help tweak and prototype. UE4's Blueprint scripts resemble flowcharts where each box represents a function or value, with connections between them representing program flow. This provides a better at-a-glance indication of game logic than a simple list of events, and makes complex behaviors easier to accomplish and games a lot faster to prototype.

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Pro
Developers have full control of the engine and source code

UE4 gives full access to the C++ source code allowing editing and upgrading anything in the system.

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Pro
Fast compilation for quick iteration

Recompiling an entire game to test a small change takes up a lot of time. UE4 quickly compiles in seconds instead of minutes improving iteration time by an order of magnitude.

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Pro
Quick release-cycle

New feature releases can be commonly expected about once a month.

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Cons

Con
Slow

Compared to other engines, UE4 seems to perform various actions considerably slower. Actions like starting the engine, opening the editor, opening a project, rebuilding shaders, updating references, calculating lightmaps, saving projects, etc take long enough to get irritating and end up wasting precious development time.

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Con
No drawcall batching, performance is very bad on mobile

There's no dynamic batching support to minimize drawcalls. There's InstancedStaticmesh concept in UE4, but it's 3d only, functionally limited and requires hardware support which rules out most mobile devices.

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Con
No Terrain Editor included

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Con
Poor documentation

Most of the "documentation" for code is actually just automatically generated from the source. If you're interested in knowing how things are supposed to work, you must either go to their answers site or pay for UDN.

Often their examples won't even compile, since they were written for now outdated versions.

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Con
C# not natively supported

UE4 does not support C# natively, but this can be achieved through MonoUE, although it requires using the MonoUE fork instead of UE itself.

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Con
Extremely long build times

Making a full rebuild, including engine can take a good 30minutes. If you plan to use Unreal professionally, you better get some licenses for Incredibuild as well.

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Con
They spend more time adding features than fixing existing ones

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Con
C++ - oriented development cycle: slow turn-around times

The Unreal Editor is the main place to do stuff (of course), so if someone wants to do a lot of C++ stuff, the compilation and linking turn-around times can be painful. Still they probably are quite fast in comparison to the provided featureset.. Still ,they are far from optimal.

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