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Childcare with a live-out nanny
Childcare with a live-out nanny doesn't differ much from that of a live-in nanny during the hours of care. She will still take care of your children in your home for the hours you have agreed upon in the contract.
The only difference is in this case, she will return to her own home at the end of the day and will be responsible for her own food expenses outside the hours of work.
If you are someone who values family and personal privacy, this may be a better option for you since the nanny won't be in your space except primarily in your absence.
Drawbacks of a live-out nanny
Of course, there is usually a disadvantage to every advantage! What you will gain in privacy you might lose in convenience. Your nanny could be occasionally late due to traffic or other unforeseen circumstances (public transport, car troubles, etc). This of course wouldn't be an issue with a live-in nanny since she's already at your house.
Needless to say, you also will not be able to deduct room and board from her salary since she will not be living with you. Since she will be spending a lot of time in your home, it's quite normal to expect for her to eat there. Almost all families provide food for their nanny with the expectation that she will prepare meals for the children and herself. If you'd like her to provide her own food; this is something you would have to negotiate in the initial contract.
All in all the drawbacks of a live-out nanny are minimal; it just depends on which kind of nanny is right for your family.