What is the difference between these major disk image formats? Are there any specific advantages / disadvantages for any of them?
ISO is like international standard (as the name itself suggests) for storing disc images and supported by most image burning/extracting software. This format is typically good for data files/video content. This format isn't good with Audio CD's, and is not even supported by image burning software's.
BIN/CUE format was specifically developed to overcome the Audio CD's archiving problem with ISO. In general, this format can be used for the same content that ISO supports and has no drawbacks.
MDS is typically used for copy protected DVD's. ISO or BIN/CUE does not have the feature of storing copy protection information within the image file. This file usually contains information about the position of layer break bits that helps in re-creating exact same copy of any copy protected DVD.
To summarize, ISO is good for storing files/data/video that isn't copy protected and is supported by almost every imaging software. BIN/CUE is good for copying Audio CD's. And, MDS is good for making copies of copy protected DVD's.
Hope this helps.