I can't speak directly to the security, but from an ease of use I much prefer the PAM. I converted to the smartcard method once Sierra was released, and now it successfully unlocks when I enter my pin from screensaver lock, but I am now frequently asked to provide my password to unlock my Local Items keychain for applications. When I was using the PAM method, this did not occur.
Secondarily, I have not found documentation as to whether I can enroll multiple Yubikeys as smartcards for my account. I have two for my work machine (one 4, one 4 Nano), and in PAM mode, I had them both enrolled in case one was lost or left at home, etc. This latter question is what brought me here today, but I don't see any posts on point.
Best of luck
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