To answer directly: the SW ones are based on computer algorithms that can be predictable or limited.
Read this comparison here with advantages and disadvantages. Generally, the average HW RNG is better compared to the average SW RNG.
But although HW RNG is called 'true' and SW RNG (being based on an algorithm) is called 'pseudo', I do not consider that a hardware RNG is always better.
In the case of hardware, it's all about how well the design is, how far does it go with the implementation and what else can affect the result.
In the case of user input, it becomes a matter of how well a user can randomize. A mouse-moving-based RNG can be better or worse compared to an average hardware one depending on user skill. Likewise, a hardware RNG can be better or worse than the average mouse-moving-based RNG depending on the skill of the HW designer.