Bungie's games used matte paintings and visual cheats to make huge environments like the space battle above the Ark and the shots of the Chief's pelican flying over the burning plains after the Cortana level. A pre-rendered cutscene would be like the stuff in Halo Wars, where it's all CG and not done in real time, but rather in a 3d engine. It's a video playing, rather than a true cutscene. The upside is that they can theoretically do effects that rival the ones in the engine, but at this point there's really no excuse for that since game engines are really damned good looking. Personally I prefer in-game cutscenes because they keep the flow the same. The pre-rendered cutscene at the end of Crysis 2 bugged the hell out of me because my graphics settings were actually better than the ones they rendered their cutscene at, so it looked washed out and low res, defeating the entire purpose.