Prefinished:
Obvious to the name, pre-finished boards arrive having already been treated and sealed prior to arriving at the distribution location. This is typically done with machinery which helps give it an even coat both in thickness and hue. Installing prefinished boards avoids the smells of finishing the floors once in place at the home and also makes it a quicker process, since there is no wait time until you can safely walk on the floor after installation.
The process in which they treat the boards at the factory means that boards often have a slight bevel to them which will create slight gaps between the edges of the boards. This can give them a distinct look but many don’t prefer that over the seamless look of unfinished wood. These gaps can also be places for your broom to overlook when sweeping.
Unfinished:
Unfinished flooring comes as a bare material. Once it is installed, it will need the stain and sealer in order to be complete. Getting unfinished boards allows for more customizing to be done by the installer. Your options for stain are almost limitless or they can work to match your existing floors. Finishing the boards while in place also allows for a more impenetrable surface for water, since the process allows the finish to get into what minimal gap there will be between the boards. This is especially important in rooms like kitchens and entry rooms.
Unfinished boards are also easier to refinish once they become worn, as they can be sanded down much less aggressively than the prefinished boards. This also means they commonly withstand more times being sanded giving the homeowner lower cost of replacing the floor.
In Summary:
People usually prefer prefinished boards if they want something that can go down quickly and easily, but for those who are looking for a customized product which will have a seamless look between boards with no bevel and superior barrier protection, unfinished floors are the best option for a truly superior end result.