When comparing xterm vs Xfce4 terminal, the Slant community recommends Xfce4 terminal for most people. In the question“What are the best terminal emulators for UNIX-like systems?” Xfce4 terminal is ranked 4th while xterm is ranked 13th. The most important reason people chose Xfce4 terminal is:
Like other applications included in the Xfce package, this terminal emulator is very lightweight and doesn't require many resources to run. This makes it perfect for systems that have low specs.
Ranked in these QuestionsQuestion Ranking
Pros
Pro Lightweight
Xterm is a very lightweight terminal. It requires few resources, allowing it to run well even on lower-end machines.
Pro Used in almost every Linux distribution
If you master xterm, you won't have to learn another tty, since it is in almost every Linux distribution.
Pro Stable, well-tested
Pro Standard with X Window system
Xterm is installed as standard software with the X Window system, and is there even when installing other terminal emulators.
Pro Supports sixel images
Pro Shows full characters for wide fallback fonts
Many terminal emulators that deal with wider fallback fonts (i.e. double-wide characters in CJK fonts) truncate display of wide characters, show Unicode "missing glyph" characters, or simply fail to display the characters at all. XTerm is "smart" enough to simply take up the extra space needed to show such wide characters.
Pro In about 30 years, it had only one issue, and that was fixed quickly
Pro It is fast and responsive
See this.
Pro Many modern terminals emulate xterm
Many terminal applications, such as OS X's Terminal.app and iTerm2 (among others), all claim xterm or xterm- variants as their $TERM and aim for support of xterm's escape sequences. Many command-line applications will assume or even hard-code escape-sequences and behavior for xterm and those terminals emulating it.
Pro Configurable via Xresources
X Toolkit resources and xrdb predates what is currently called "theme". Although one needs to read man, mitigates most listed cons

Pro Good for systems with low specs
Like other applications included in the Xfce package, this terminal emulator is very lightweight and doesn't require many resources to run. This makes it perfect for systems that have low specs.
Pro True transparency
You can set the transparency of the Xfce4 terminal on any amount you want, out of the box.
Pro Tabs support
Xfce4 fully supports tabs and tab-based navigation.
Pro Almost everything is customizable
You can configure size, color, background, etc.
Pro Composition effects
Xfce4 terminal takes advantage of xfce composition effects.
Pro Fast rendering
Pro Can be switched to a drop-down terminal
You can configure the Xfce-terminal to act as a dropdown terminal if you want, which makes for greater ease of use.
Cons
Con No native transparency
Xterm does not natively support transparency (though it can be emulated if needs be).
Con Bad defaults
Very small default size. No way to know to how to configure size.
Con No tabs
Con It blinks
If it blinks for you too, you can try this: man xterm
and then press Shift+G.
Con Has few dependencies
Has dependencies like xbitmaps.
Con Historical source code
The stories behind terminal emulation beyond their classical representatives (of which xterm is simply the most long-lived) are somewhere inbetween subtly irritating to downright surreal.
Con Cannot set text color for character under cursor to background color
Suppose you have a dark background with a light cursor and light foreground color: the light cursor will cover up whatever character it is on, so that you cannot read it. There is no option to set the foreground color for the character under the cursor to what is normally the background color. Such an option would allow you to read the character under the cursor.
Con Execution in xfce4-terminal - e mode is not always functional
Con Resizing text resizes window
Con No profiles
There's no profiles or profile-based customization in Xfce-terminal.
Con Can't scroll on spamming text
When text generates too fast, you can't scroll it, so you just can't read anything in such moments.
Con Does not support sixel images
