I have used Terminal.app since 10.0, and have never felt like it needed replacing. What is lacking in Terminal that would improve my day to day by using a different app?
That's a question that only you can answer. We have no idea what your average terminal activity involves.
(I can't remember why I switched. It must have been 10 years ago now, maybe more, and I've stuck with iTerm2 ever since (even though it annoys me with a new beta update practically every time I launch it). It could have been nothing fancier than the vertical window split. But there was definitely something that persuaded me to change!)
EDIT: this did get me wondering, and I noticed two things it does have that it looks like Terminal still doesn't: configurable mouse selection word boundary chars, and implicit copy-to-clipboard on selection. As an inveterate mouse selector, I wonder if it was these. I might well actually have the word boundary chars still set to the default ("/-+\~_." is what I've got), but I do use the click-to-copy a lot.
There's a mini-renaissance going on with new terminal tools, like tmux, neovim (which has an ecosystem of plugins itself), htop, and many more (https://github.com/rothgar/awesome-tuis). They take greater advantage of 24-bit color, "nerd" fonts (that have icons for glyphs), some graphics capability, and so on.
I used Terminal for many years, too, but switched to iTerm2 a little over a year ago as I wanted to learn neovim.
In my opinion, the most notable feature missing from Terminal.app is 24-bit color support. This is a standard feature in modern terminal emulators, and is one that I enjoy very much. But for many people, that is not a feature that makes a big difference.
