It’s brilliant for structured intervals because you have no choice but to hold the programmed power level to the absolute end of each effort. No slacking off. No kidding yourself. If you drop cadence, it just ups the effort per pedal stroke.
Something like the Sufferfest videos on ERG is brutal. I’ve trained with perceived exertion and ERG and for me there’s no comparison when it comes to effectiveness. To be fair, I’ve never used a dumb trainer with a power meter and tried to sustain a particular wattage, but I can’t imagine it working as well.
There are downsides. With really short, sharp efforts, some smart trainers will find it hard to respond quickly enough, though something like a Kickr is pretty good and, if you drop to a really low cadence you can disappear into a sort of downward spiral where it becomes almost impossible to keep the pedals moving, but mostly it’s great.
The trouble with using ERG mode for an FTP test is that you’re basically going to have to guess your FTP in advance then pedal at that level. You’ll never know if you could have gone harder, which is kind of the point of an FTP test. Sure, it takes the pacing side of it out of the equation, but all it’s really going to tell you is whether you can sustain that targeted level for 20 minutes, not whether that’s the hardest effort you can sustain.
So yes, potentially it makes individual sessions more effective and, with the right programme, could make you fitter. Doesn’t mean you can’t work just as hard without ERG mode, but takes a lot of the thought out of it. All you really need to do is keep to the right cadence and the trainer does the rest.