Arcades were great back then because you couldn't get the type of experience at home with the graphics. The Dreamcast made having the arcade experience at home affordable and it's a shame the system didn't last longer. I always had more fun in the arcades than I did on home consoles growing up in the 90s.

During the 8-bit era arcades were slightly better. The arcades had more 16-bit like graphics at the time. Once the SNES came out though, home consoles had graphics which were at least equal to, sometimes superior to the arcade ones. Console games were also cheaper overall because for the same money with which you could play an arcade game for 10~20 minutes you could rent a console game & play it for a couple days. Add to that the fact that consoles had way more variety & the fact that most of their games had infinitely greater depth of play, and arcades just couldn't hold a candle.
The only "advantage" arcades had at that point were 3d graphics, but those looked like dancing donkey diarrhea (virtua fighter being a prime example), atari 2600 graphics looked better than that early 3d junk.