There are basically two sources for failure in an AIO cooler.
1. The pump, being a mechanical device will eventually fail.
2. The cooling fluid will eventually get air into the circuit. Even when new, a bit of air can not be fully excluded.
Over time, air infused into the system through the connection tubes which are a bit permeable.
In time, air bubbles will accumulate. Mostly, this is not a big deal so long as the bubbles do not accumulate in the pump. So long as the pump is mounted lower than part of the radiator, you are ok. And, so long as the air bubbles do not keep fluid from circulating.
Here are two interesting videos on the subject from differing viewpoints. Look at them both:
View: https://www.youtube.com/watch?v=BbGomv195sk
View: https://www.youtube.com/watch?v=DKwA7ygTJn0
3. While rare, a break in the coolant lines can happen with disastrous consequences o the motherboard and other parts.
Why use an aio?
1. You may want to highly overclock a processor. From an efficiency point of view, that might require a 360 aio in a good case.
240 aio coolers are about as efficient as a good air cooler.
2. If you have a small case with restricted headroom for a cooler, a aio may be the only solution.
You typically need 160mm for a top air cooler.
3. Aesthetics. No accounting for this.
Why use air if you can?
- Air is usually cheaper.
- Air cooler fans are usually quieter.
- Air is easier to install.
aio mounting is catch 22. Do you mount the radiator as intake which cools the cpu best, but gives your motherboard and graphics card hot air to work with.
Or, do you mount as exhaust which reduces the cooling ability of the radiator.
4. Air has no mechanical parts to fail. If the fan fails, you still get some cooling until you can replace the fan.
5. Air will never have a catastrophic leak.