In the end, the printing method affects your cover price and marketability. A run of books is less expensive to print per book so the publisher can set a lower cover price to be competitive and still make a profit. However, there is an upfront cost to do it this way and there are warehousing costs. The publisher must be confidentthat there is a large demand for the book to take this risk.
Also, Print-on-Demand carries a stigma that bookstores aren’t crazy about. They will be more interested in hosting events and stocking your title if your books are printed in a run.
There are many people who call Print-on-Demand the wave of the future. There are book vending machines being created where you push a button and a book is printed, bound and popped out. Right now, the costs are simply too high to compete with brick and mortar stores and printing books in a run. Maybe in the future POD will become a more cost effective way to create books but at the moment, commercial publishers and printing a run of books are the way to go.