Aircraft and there advantages and limitation in ww1?

Answer 1

Aircraft were pretty basic in WWI. At the beginning of the war there was no interrupter gear to enable the pilot to shoot through the propeller, and guns were, in any event, prone to jamming. At one time until Lewis guns began to be mounted (on Allied fighters) the pilots/observers used rifles and hand guns to shoot at each other. Bomb sighting had not been developed and bombs were just dropped over the side of the aircraft in the hope they might hit something. As the war went on, many of these shortcoming were corrected. The life of a fighter pilot was fairly short, however. The Germans developed large 4 engined bombers (the Gotha) which was capable of bombing England. (see:- http://www.centennialofflight.gov/essay/Air_Power/WWI_Bombing/AP3G4.htm
Pilots were not allowed parachutes for a long time as the command thought these would make pilots careless.
Planes gradually became used by both sides as artillery spotters for ground forces.

Answer 2

rdenig made some good points.

I believe the artillery spotting and reconnaissance by aircraft came first, then one side armed their aircraft to shoot down the unarmed reconnaissance aircraft, then the other side armed to shoot down the other armed aircraft, and it went from there.

At wars end, the tactic was to send up reconnaissance aircraft with armed fighter support to guard against enemy interceptor aircraft.

One advantage of aircraft in WW1 was they made great ballon busters!
http://www.theaerodrome.com/aces/balloon_busters.php