If any one component is having a problem or fails, the entire system is down. This system is obsolete for residential applications. Any component failing results in the entire system failing. If a panel is in the shade or is under performing, it limits the entire sting to the weakest performer.
Manufactured By SolarEdge
This system is just like the central inverting system above but with a couple advantages. One power optimizer (shown in orange) is paired with each panel and helps the system not be limited to the weakest performing panel. Also, if a panel fails, which is extremely unlikely, then only that panel is out. Panel failure is extremely rare so the power optimizers don't fix the main problem which is the single point of failure with a central inverter. The power optimizers are not inverting the DC to AC.
Manufactured by Enphase Energy
This is my preferred system. In this case , each panel acts completely independently because of its modular architecture. Each panel is paired with its own micro-inverter, decentralizing the inversion and any single points of failure. In this system, not only will the micro-inverters produce a few more percent than the systems above, but if any micro-inverter or panel were to fail, you only have one panel out. There are no single points of failure.