If there are multiple images on a page and all are images on the fly these request hitting the publisher will certainly have an impact. Each request gets the response from the Servlet and its cached in the dispatcher for the subsequent request.
If the same image is used in multiple pages, each page may have it own image URL.
For any image update: Clearing those image you may have to activate the parent node(either the dam asset or page)
Doesn't consume space in the publisher
The renditions are a readily available resource in the publisher in the DAM and can be served much faster if the same scenario is applied.
One Image will have the same URL for all the pages referenced on the site.
For any image update: Author can update one rendition or update an original image in the DAM and clears the dispatcher respectively
Consumes spaces in the publisher.
You can create a sample page with two different implementations and check the load time of the page for the first time and subsequent times to record the performance metrics. Take decisions based on it.
I could say it depends on the requirement.
If showing images in the multimedia section like displaying photos in an album rendition is better.
If displaying smaller thumbnails rendition size which is not going to be used anywhere on the site you can use adaptive image/named transform image. Instead of having that thumbnails rendition size to be stored by the author and publish's DAM.