I started playing D&D long before MMRPGs were popular, in other words I started playing D&D first, I'm in it for the story. Most of my players started playing MMRPGs first, then discovered D&D, they are in it for the little bags of xp that magically drop whenever you do something right. To them the story is secondary, they measure success not based on story, but on going up in levels.
I have had limited success in slowly changes those views over time.
D&D players take many forms and are as varied as the entire population is, and there are huge differences in how they play depending on when they entered the game and how.
It has been my experience that a milestone system, which was used by some long before that term was ever codified into the player's handbook, changes PC behaviour. Once the PCs realize that the 'side quests' have no effect on whether they level up or not, they will start skipping them. They start focusing on the central story only, and start ignoring the shopkeeper who's having trouble with the local thieve's guild or the caravan being harrassed by a monster - because they know there's no xp in it for them.
Some PCs are motivated by how much money their characters hoard. Some PCs are motivated by the story that is being jointly created. Some PCs are motivated by how much they can craft. Some PCs are motivated by how many baddies they can blast into dust in a single action. Some PCs are motivated by collecting xp as if it produced a contact high.
Maybe you are fortunate enough to have a group that's motivated by story, i'd love to find a group like that, but in 40+ yrs of gaming, of all the groups i've found, formed, and merged together - I have only found a couple of players motivated by story. Most, especially those who were introduced to the genre thru video games, are in it for the little magic numbers (and corresponding dopamine hit) that appear over their heads whenever they do something in-game.
For those players who approach the game like it's a video or board game, a milestone type of reward system leads to bad behavior and hurts the story.
I am playing in a campaign that technically uses xp, but there was one stretch of the campaign that seemed to switch to milestone. We knew that we would not level up until our PCs reached a destination that would take us months, in and out of game, to reach (long distance travel, well over a thousand miles). That DM's style is to never fast forward, and to play out EVERY day. Very quickly random encounters began to be seen by some as a hindrance to reaching that 'level up'. Optional side quests and exploration was routinely avoided, because that too would mean having to go more games before reaching the level up spot.
That is why I say the xp system is better than milestone. You can still make sure the PCs reach the appropriate level you want them at, simply by adjusting the xp you award, but it eliminates the problem of PCs skipping content because they know it doesn't come with the one thing they want - xp. Let's face it, although I don't like generalizing, there are certain generations that are kind of known for seeking immediate reward and lose interest in things that don't give a constant supply of rewards such as xp. There's a reason many products are designed to give frequent small rewards instead of less frequent larger rewards.
I just want to add another data point ... none of the groups I have played or run, post high school, were significantly motivated to make in game character decisions based on XP or on increasing the rate of leveling up. No one avoided quests because they would slow down leveling. No one advocated slaughtering everything to increase XP or leveling rate. The sample size here probably encompasses about 100 different players and DMs over the years. Most of these games used Milestone leveling of one sort or another.
There are a wide range of playstyles and possible motivations for players and XP is one of them. I can remember playing when I prioritized XP, gold and loot (though this was AD&D and used XP leveling). I'd also add that many DMs in that era did not equally reward non-violent solutions to encounters. Very typically, full XP was only awarded for killing all of the monsters, though it depended on the DM, but I don't recall any awarding full XP for clever avoidance of encounters.
These days, I use "Milestone" leveling where significant events or when a "reasonable" passage of time and actions in the story justify leveling up. I find it keeps things simple and limits players making decisions in character that are motivated by getting the next level up ... eg. manufacturing a bar fight so that they can gain the extra 100xp to level up. I also find that XP bonus points tends to create uneven advancement which can result in a separation of levels in the party which can lead to a disparity in capability and effectiveness. Unless the DM makes the bonus awards so insignificant that they don't really affect overall advancement. In that case, the players can easily see that and it loses effectiveness as a motivating factor.
Overall, I far prefer Milestone, even though I spent the first 10-20 years if not more using XP. However, each group is different and as long as whatever they choose works for their group then that is awesome :)
I just want to add another data point ... none of the groups I have played or run, post high school, were significantly motivated to make in game character decisions based on XP or on increasing the rate of leveling up. No one avoided quests because they would slow down leveling. No one advocated slaughtering everything to increase XP or leveling rate. The sample size here probably encompasses about 100 different players and DMs over the years. Most of these games used Milestone leveling of one sort or another.
There are a wide range of playstyles and possible motivations for players and XP is one of them. I can remember playing when I prioritized XP, gold and loot (though this was AD&D and used XP leveling). I'd also add that many DMs in that era did not equally reward non-violent solutions to encounters. Very typically, full XP was only awarded for killing all of the monsters, though it depended on the DM, but I don't recall any awarding full XP for clever avoidance of encounters.
These days, I use "Milestone" leveling where significant events or when a "reasonable" passage of time and actions in the story justify leveling up. I find it keeps things simple and limits players making decisions in character that are motivated by getting the next level up ... eg. manufacturing a bar fight so that they can gain the extra 100xp to level up. I also find that XP bonus points tends to create uneven advancement which can result in a separation of levels in the party which can lead to a disparity in capability and effectiveness. Unless the DM makes the bonus awards so insignificant that they don't really affect overall advancement. In that case, the players can easily see that and it loses effectiveness as a motivating factor.
Overall, I far prefer Milestone, even though I spent the first 10-20 years if not more using XP. However, each group is different and as long as whatever they choose works for their group then that is awesome :)