It replaces most of the functions that an ECU does such as timing, fuel, rev limit etc etc. Idle if you choose to do so.
In regards to why the microrech and haltec are better, for you *perhaps* tweety the difference is negligable however forgive me for saying this mazdaprotegeES but you do not know much about ECUs or standalones therefore tackling the process of assembling a megasquirt, creating a base map etc etc is going to cost you to acquire that expertise or your going to have a massive learning curve to get anywhere.
Further, im unsure if this has changed but prebuilt units used to require modification to work with FS/FP engines as they didnt support dual coils IIRC. The other matter is that the MS is 12x12 mapping stock IIRC which isn't as good as MTs 16x16 (though Haltech/Adaptronic have 32x32 but are more expensive again (dont expect change from 1500 AUD)).
The benefit of MT is also that heaps of people on this board have used them and thus there is a substantial knowledge base in the archives, maps and a thread dedicated to helping people whom have MTs with tuning etc
