I\'ve read some about .egg files and I\'ve noticed them in my lib directory but what are the advantages/disadvantages of using then as a developer?
One egg by itself is not better than a proper source release. The good part is the dependency handling. Like debian or rpm packages, you can say you depend on other eggs and they'll be installed automatically (through pypi.python.org).
A second comment: the egg format itself is a binary packaged format. Normal python packages that consist of just python code are best distributed as "source releases", so "python setup.py sdist" which result in a .tar.gz. These are also commonly called "eggs" when uploaded to pypi.
Where you need binary eggs: when you're bundling some C code extension. You'll need several binary eggs (a 32bit unix one, a windows one, etc.) then.