When would you insert keyframes one frame at a time rather than insert several by using Modify, Frames, Convert to Keyframes (or Convert to Blank Keyframes) for an entire span?
When you want to make a successive adjustments to each keyframe, it makes sense to draw the first frame, insert a keyframe, and then adjust the new frame before inserting a third frame. This process is effective because each time you insert a keyframe, Flash copies the contents of the previous keyframe. Inserting one keyframe at a time ensures that each keyframe is the same as the previous one, so that you need to make only a slight change before continuing. When you intend to draw an entirely new image into each keyframe, you should consider inserting blank keyframes (either one at a time or by selecting Modify, Timeline, Convert to Blank Keyframes). That way, each new keyframe starts with no contents.
What's the difference between inserting a keyframe and then deleting the contents on the Stage and simply inserting a blank keyframe?
There is no difference; the result of either operation is a blank keyframe (indicated by a hollow circle in the cell of the Timeline). Inserting a regular keyframe and deleting the contents is the easier of the two techniques to learn because you don't have to think about blank keyframes. All you have are keyframes, and some just don't have any contents.
Is frame-by-frame the best type of animation?
No. It's the most appropriate when you want each frame to appear differently from the next, but it takes the most work, too. In the coming hours, you'll see that other techniques are often easier and much more efficient.