I noticed that even if I just copy the folder containing the software/game it still works fine. So which is better and preferable? Thanks.
During installation some files may be placed into system folders and some system settings might be set. The installation may also check what sort of system you have and adjust program settings accordingly. Just copying a program’s folder won’t do that.
Most software won’t work, or work properly anyway, if it is not installed using an installer. For example, it might need to write to the registry (not for the faint of heart) or put some auxiliary files in some obscure directory. If your games work just by copying them, fine, but most modern software won’t.
Most MacOS applications install by simply dragging the .app into /Applications.
In the case of those that do not, additional files may be deposited in your users/you/library/preferences folder or more complicated things like protocols and drivers written to various locatons, but the MacOS doesn’t have a registry (yay!) and furthermore each application tends to carry around its own support files, within the .app bundle, rather than depositing shared library files at the system level which is more typical of Windows. The latter strategy takes up less room, but makes incompatibilities due to different versions of the same library files more likely.
so I’ll go with installing. thanks. 
Back in the pre-Windows days copying files into a separate directory (folder) is exactly what “installing” any piece of software was. Games especially. They all came with everything they needed to run (video drivers, sound drives, executables, overlay files etc.) They worked because programs were all their own separate worlds, they shared absolutely nothing with any other piece of software that happened to be on the computer. Hell, pre-harddisk there wasn’t anything else on the computer other than the game or program you just loaded (off a floppy disk)!
And there was usually a foot of snow on the keyboard! Uphill both ways…
And IIRC, copying something to the App folder automatically installs any extra stuff anyways–assuming the App is designed correctly.
Ah yes, I remember the nerd down the hall in college who would let me use her computer to write my essays. Had two 5.25 inch floppy drives: one with the word-processor software (MultiMate) and the other for saved documents. All keyboard, no mouse. Now I think about it, I don’t think there was even a dos, unless it was part of the wp software. We also played Leather Goddesses of Phobos on that machine. Good times.
In those days, your program disc had the system files on it as well that loaded the OS, either CP/M or DOS.
… which works because OS X observes that you moved a .app bundle and does its various installation tasks behind-the-scenes. This is sufficient for simple installation tasks, like registering new file types, or new Internet protocols, etc.
More complex OS X applications (read: almost all serious ones) require an actual installer, which is almost identical to the Windows MSI installer.
Many OSX applications, if they have to do anything fancy to settle into their new home, are designed to do those things automatically the first time they’re run.
For some programs it really is fine to just copy the files. Generally either it will start and work fine or it will fail immediately, usually with an error, “filename.dll not found”.
And when you pressed spell-check the program would tell you to- “PLEASE REMOVE PROGRAM DISK AND INSERT SPELL CHECK DICTIONARY DISK” or words to that effect…