w3.eth.sendTransaction()
only supports sending unsigned transactions. In order to use it, your node must be managing your private key. Since the node must manage your key, you must not use it with a hosted node.
w3.eth.sendRawTransaction()
requires that the transaction be already signed and serialized. So it requires extra serialization steps to use, but enables you to broadcast transactions on hosted nodes. There are other reasons that you might want to use a local key, of course. All of them would require using sendRawTransaction()
.