There's a fair amount of stuff VLC just won't play (its H.264 decoder seems especially crummy, has glitches, and 4x higher CPU usage than anything else -- when it even works). And the interface is one of the worst ever too. And the video post-processing options are extremely limited too (compared to ffdshow for example), and that makes a HUGE difference (sharpening, scaling and so on).
MPC HC is about a trillion times better IMO.
Plays mostly everything (I do however have
ffdshow tryouts,
ac3filter and
haali splitter installed though), great interface, good keyboard bindings, good popup menus, nice subtitle support, can use great directshow codecs too (you can force it to use/not use some and so on), far more options in general, support for EVR renderer (looks great), playback of 1080p H.264 @ 10mbit (profile 4.1) using like 1% CPU usage with almost any recent vid card (using built-in decoder too -- no need for coreavc or anything), ditto for VC-1, built-in codecs for most common formats, great audio switcher and
tons more.
VLC is better for supporting some rather obscure formats out of the box (although any media player with ffdshow tryout installed will play almost anything anyways), playing incomplete & damaged files, and streaming/transcoding. Besides that, it's so far behind MPC HC it's not even funny.