LOCOS is a classical oxidation process, steam or dry. It
can't be patterned especially fine and can't go deep or at
high aspect ratio.
A trench etch with either a refill or a sidewall reox can be
cut finer and deeper, enabling better isolation* and packing
* the quality of oxide surface being critical
The preference is stronger as you challenge active-active
spacings, and as those spacings (rather than intradevice
dimensions) begin to dominate functional packing density.
However LOCOS still has huge cost advantages where it
will work - I am familiar with some FDSOI technologies
where the very thin film makes LOCOS perfectly viable
because the aspect ratio is low (<0.1um film, 1um active-
active spacing). If you wanted a 0.5um deep isolation
and a 0.2um active-active, though, you'd have no choice
but STI.