Exercise 1: Prove that for $n=1,2,3,\ldots$ we have $P(n).$
Proof: $P(1)$ can be seen to be true because blah blah blah. If $n$ is any value for which $P(n)$ is true, then we can argue that etc. etc. and see that $P(n+1)$ must also be true. So by the principle of mathematical induction, the desired result must hold.
Exercise 2: Use the well-ordering of $\mathbb N$ to show that for all $n\in\mathbb N$, $P(n).$
Proof: Suppose the desired result is false. Then for some $n\in\mathbb N$, $P(n)$ must be false. Let $n$ be the smallest such member of $\mathbb N.$ Since $P(n)$ is false, the following argument shows that $P(n-1)$ is also false. But that contradicts the minimality of $n$.
What examples show that one method is preferable in some cases and the other in some other cases? Are there any in which the second method is simpler than the first?
If we're only talking about $ \mathbb{N} $, the second proof you provided is the proof of the induction principle, so the two are equivalent.
As to which style is used, I would say that the first style is preferred, mostly because it hides the technical details of why the induction principle holds, and lets you concentrate on the actual proof.