Benefits of oriented strand board include lower cost, fewer soft spots and a green building material. The process of creating OSB allows manufacturers to create larger panels than they can with plywood. In warm climates, OSB does not delaminate as plywood does.
Building a 2,400 square foot house using OSB instead of plywood reduces the cost of construction by $700 as of 2015. Plywood requires the use of more expensive old-growth timber that the manufacturer cuts into continuous thin sheets to laminate into the finished product while OSB uses small squares of wood in a process that presses the wood together to form panels. The process allows the use of poplar and other farmed timber. Many of the trees manufacturers use for OSB would otherwise be considered scrap or become pulp. This less expensive option is also more environmentally friendly than making plywood.
Knots in the trees that the mill uses to form plywood often leave soft spots in the material. However, with OSB, the small size of the squares allows the manufacturer to eliminate such soft spots. The resulting product provides a smoother surface than most plywood.
OSB does have some negative characteristics. It tends to swell more than plywood with exposure to water. It retains moisture longer and is more likely to rot.