I used to do both. It was fairly amusing to watch the people from various gaming channels that I subscribe to on YouTube play the game. After a while though, they began to keep repeating the same few tracks over and over again, and the results of the races rarely changed, so it grew less exciting. The videos were still entertaining, primarily due to the personalities of the players, but less so than most of their other videos.
I've pretty much stopped watching now and just play. The direct connection to the game keeps it exciting, even if I am playing the same tracks over and over again. With how greatly items affect the standings in Mario Kart, it's pretty much impossible to stay in one position for the entire race, so that keeps it from becoming dull.