I've had both - lounge-diner in previous house and kitchen-diner in this house. (And following extension a few years ago, while we still have original lounge separately, our kitchen-diner now also has a seating area as well).
Personally, I prefer kitchen diner setup. Smells is one thing. And ease of bringing things to table etc. And back to dishwasher.
We have a breakfast bar with stools to sit on between kitchen and dining areas, so people can sit and chat to the chef while they do the cooking. Which is nice. And handy to put things up onto for bringing to the table.
Kitchen diner is tiled - lounge diner was carpeted. May not be an issue, but when DC are small, or if you have messy eaters (I tend to be clumsy at times) then tiles are far easier to clean/wash and far less likely to stain than carpet.
With kitchen-diner, I can use the big table for cooking prep, rolling out big batches of cookies or making pies etc if I need extra space. Whereas I wouldn't do that on the same table when it was in the lounge-diner. Too much mess, and not nearly so easy to move everything.
Also, the table is handy when I bring food shopping home or its delivered, to organise as I am putting things away. And to pull everything out of a cupboard to clean/organise it (the big annual clean of each cupboard in turn kind of jobs).
And the table is also where craft projects tend to happen etc, and colouring in when DD was small. So we can be working together while things cook, or she can work on something in my company but without needing my direct input by being in the same room. And I am not worried about glitter going everywhere or paint spilling on the floor (see tiles above). Just a quick hoover and then mop, and all sorted. I needed plastic sheeting in old house for messy jobs like that.