ok, i'll jump in and give it a try :-)
the difference between racks and tracks is mainly intended for the way cubase interacts with the plugin.
Going the "rack" way is a method to use the functionality of the plugin as much as possible.
The main reason to go for a rack is the fact that you use the multitimbral capabilities of the plugin with as less as possible hassle on the main workflow window of cubase. An example: You create a rack, it has its midi track attached, and with very few clicks you create up to f.e. 64 tracks (Halion 5 or Kontakt) in aninstance. Very quick and easy workflow.
The main drawback with this method is imho that it is challenging for cubase to deal with it on a multicore environment. Most of the times the software needs huge amounts of resources if one single plugin is doing its things on f.e. 16 or more midi tracks. Often the plugin is also capable of doing its own core handlling, and that will interfere with cubase. So core handling is something to be carefull for.
That being said, it is for a lot of people a way of working (i.e. workflow)to design sub-templates in the gui of a plugin. So they rely on the rack. Nothing wrong with that. It's about how you want to do thing, and cubase will allow you to doit.
The instrument track thing is much more closer to the cubase environment, and in fact is the way i think most of the new functions in cubase are designed for. Recently they made it possible to do the multitimbral approach with instrument tracks, but overall, that is not the way cubase wants you to go if you are going to build a template.
Building a template (version 8) is imho mostly based on 1 on 1 relationships between a miditrack and a plugin.
There are several reasons for doing that.
1. cubase can do the core handling on its own on every condition
2. instrument tracks allow you to make track presets, these are very handy things where you combine a midi track with mixer settings and efx and even midi inserts. (and indeed you can save and do the same thing with a rack in one CPR)
3. a track can also be enabled and disabled (main reason i think to go for that kind of a workflow in v8 i think)
Resources aren't important anymore with that approach. You can have, like lots of us do, a monster PC, but when talking about templates, unless you have a real monster, there are limits to be encountered very quickly imho. Not the case with tracks.
So, when building a template, a track imho is the obvious way to go. Racks are for those guys who want to see a GUI in front of them to make logical choices/combinations. In terms of resources to spare they are not the way to go.
So when building templates, you are far better of with a track approach.
--) choose a sound, finetune it with the mixer and fx and make a preset of it. It is 1 on 1, and can be used every time and everywhere. The real power of that approach can be achieved when you are going to use the render in place functionality. Render it, and disable the instrument track. Resources needed drop down to zero.
--) with that kind of a workflow, you do not need a monster computer anymore and you will still be able to make a very very complex song. And hey, probably you discover the fact that you can do totally different things with the same sound/sequence once it is rendered to audio. :-)
But choices have to be made by what you want to achieve. So the choice between racks and tracks is the same as having a shot of wodka or gin. The result can be the same, but it's about how easy you can swallow it. :-)
But in terms of template building, imho cubase is more designed for the track approach since it is more closely attached to the way the DAW is designed, and the rack is a more 3th party friendly approach, but hey, SB has the same approach with f.e halion that offers up to 64 channels in a rack.
And to give it a nice ending: just look at the specs.
Tracks are unlimited in cubase.
Racks are not.
Maybe that says something too about what is what... :-)