Live music just brings force, intensity and dynamics to the songs. Studio albums are great, but it's different. Imo a band is a real band after they really deliver their music in live performances. It's not about hitting all the exact same notes as in the studio album. Everyone has heard the album already ;). Still I prefer smaller club gigs over festivals. Clubs have better atmosphere (just my opinion) and acoustics.
I disagree. I think you can have great studio bands who produce amazing albums but really aren't all that fantastic live. But then you have bands who produce average studio albums but when you see them live they blow you away. Neither is preferable as they both have their merits.
There are some bands who I now never listen to their studio albums because they were simply too good live. Like Muse for example. I always buy their albums but their live performance just blows those away. Another I was very surprised by was Maroon 5. I took a girlfriend to see them thinking in my eyes they'd be appalling. They now rate as the second best (after muse) band I've ever seen. Their stage presence and skill on instruments was amazing. But then there are bands like Paramore. They do an ok live show. But their studio album is always much better. The same goes with Pendulum. They kicked ass live but I still prefer listening to their album. But there's nothing wrong with that at all as it takes a different kind of skill.
I definitely agree on the smaller venues though. Some of the best gigs I've been to were at my local arena with Enter Shikari who are a local band for me. 200 people in a small town arena. Nothing really beats it. Even on a different scale, I much preferred Muse when they played Wembley arena. When they moved to the Stadium the sound quality dramatically dropped (as with most open air music events), although the scale increased of course.