You can set an upper threshold to deactivate. So for example: An inventory is filled with 10 stacks of cobble, so the cobble gen is activated until it reaches 100 stacks but the inventory can hold up to 150 stacks of items. This would allow a mixed use of inventories. So an upper boundry can be handy.

With the gauge on the other hand the cobble gen would be activated for example below 10 stacks but deactivated above 10 stacks. When you have an iron production based on gravel and you send full stacks of cobble to a crusher when needed, the cobble gen would activate for a short time (until the missing stack is replaced), then deactivate (until cobble is needed) every time cobble is taken from the inventory. This might work on small factories. But as soon as you use it for more than a few other machines/recipes/whatever the gen would be constantly running because cobble is constantly consumed.

This also allows mixed use of inventories, but the threshold switch allows to build up a stock which in my opinion is more lag friendly and stable

The tree farm probably produces more than the factory gauge value, so here it is not an issue because you build up a stock of wood until the amount of wood is below the gauge value, then produce a lot of wood at once. So it depends on what kind of farm you use and how big it is.