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The very earliest PCs had their logic functions made almost entirely from small, discrete components. If you look at the motherboard of an early 1980s PC, you'll find dozens of different chips on the board, working together to control the various functions a motherboard must provide. Over time, the industry has moved steadily towards increasingly integrated designs, with fewer chips performing more functions. Today's motherboards, for example, have most of their functions provided by a chipset, which is a very small set of chips that does what the dozens of chips on older boards did.
Integration is valuable because it greatly reduces production costs, makes higher-performance designs more feasible, and also improves reliability substantially. However, it also has a drawback: it reduces flexibility. You get everything the way the chip maker created it, and cannot easily change whatever is in the integrated whole. This is why standard PC designs only go so far in their integration attempts: the motherboard chipset provides core logic functionality and interfaces between all the parts of the PC, but it doesn't try to do everything. You still have a separate video card, hard disk drive, CPU, sound card and so on.
However, the desire to reduce cost has caused some PC makers to try to push integration even further. As a result, there are now systems that have on their motherboards many of the functions traditionally provided by discrete components. The most popular integrated components are video and sound, with network interfaces gaining in popularity, and modems as well. By adding these components to the motherboard, PC makers can offer them as features to improve sales while eliminating much of the costs associated with separate components.
More features is good, especially for a lower-end PC (where integrated designs are most commonly found.) There are a number of problems with integrated components however:
As you can see, I'm not a big fan of integrated components. They are put into systems almost exclusively to cut cost, and there are only limited circumstances under which I think they are worthwhile. I would agree that if you are buying a low-end or middle-of-the-road system on a budget, having integrated networking and sound is certainly preferable to doing without these functions due to budget constraints. If you are not the type to ever upgrade your system, the drawbacks of integrated components are manageable. On the other hand, if performance, upgradeability and flexibility are very important to you, you don't want a system that has functions such as video, audio and modem on the motherboard.