The drawback is that it's not replicated. With etcd, you set up multiple control-plane nodes (ex: 5) and you can tolerate a minority of them being down without any effect (ex: 2/3 down). With SQLite, you can only have one control-plane node, and if it's down your control-plane is unavailable. This is fine for small clusters where you don't want to run multiple control-plane nodes, or you don't think it will go down, or you don't mind fixing it.
The drawback is that it's not replicated. With etcd, you set up multiple control-plane nodes (ex: 5) and you can tolerate a minority of them being down without any effect (ex: 2/3 down). With SQLite, you can only have one control-plane node, and if it's down your control-plane is unavailable. This is fine for small clusters where you don't want to run multiple control-plane nodes, or you don't think it will go down, or you don't mind fixing it.