A properly set up extension is not any different than having a vehicle with a long rear overhang and towing with it. Is it better to tow with the trailer closer or on top of axle? Yes, but it is not always practical for your chosen application.
Some advantages of towing with a long overhang:
- Tighter turning radius due to shorter tow vehicle wheelbase
- Tighter turning radius due to shorter trailer ball to axle length
- Better tracking through through corners with more rear end swing
- Less steering input required when backing
Some of the disadvantages with a long overhang:
- Rear may swing into another lane when making sharp turns
- Overhang may drag on uneven surfaces
- Trailer has more leverage on the tow vehicle
- More likely to unload front axle weight without weight distribution systems