Freewheels matured from the original 3-speed by having additional gears and a derailleur. It expanded to 5, then 6, 7, 8, and 9. The problems associated with freewheels are due to the additive cantilever effect 5+ gears has upon the design with breaking or jamming, and by having only 2 bearings for support over then length of the axel. In contrast, Freehubs typically have 3 or 4 integrated bearings and can support axel diameters up to 15 mm which coincidentally makes them attractive for adaptation for hub motors.
There is no way to convert freewheels to freehubs and vise versa for what is probably very deliberate reasons. Shimano used to make some awesome freewheels but production stopped long ago - making good MtB freewheels very scarce. The Chinese knock-offs are fine for a season or two although the quality between units varies; I have a freewheel mounted on my bike now and it clacks loudly as it did on Day-One, yet was able to put 4,000 miles on it. Presently I’m doing an R&R rust treatment on the rear hub motor and purchased a replacement freewheel, same manufacturer, same gearing, and it is much tighter and quieter.
I prefer freehubs
, and for a while the ebike mentioned above was configured at a FS-FWD with a giant freehub on the rear. It was so quiet and smooth, and found it very inspiring and full of potential. For a time I took it serious and designed DD replacement that would use FreeHubs as an alternative (before moving on to AF motors), but in truth there is not a lot of room to work with: Freehubs vary quite a bit between manufacturers; the ISO Standard is limited specifically to axel and gear interface, though the rest of the design diverges widely: Just look at Campagnolo and Shimano. I fear that to create a truly integrated freehub DD motor would require licensing and/or partnership with a freehub manufacturer to produce a reliable and field-repairable product. In consideration, I decided to not continue in this pursuit. Eventually I switched out the freehub for a DD freewheel which created the 2WD ebike.
In retrospect, having 9 to 11 gears at this point in my life is pretty silly; during the 2011 road trip only 1 or 2 were used because the 2WD ebike is already powerful and fast. Having a collection of gears is more about insurance I suppose than anything else: A way to recover from total system failure (both drives) by leaving pedaling as the only option forward, in albeit in grandma
So the question then becomes rhetorical: Why have gears at all? Because it’s practical for low power-assisted electrically-augmented bikes. Freewheels are fine for up to 7 gears; after that it’s time to consider freehubs where theoretically we can have … what, like 11 gears now? That’s for the roadie. An electric bike with that many gears (on the rear) doesn’t make much sense, and after 8 gears, there isn’t room on most frames to support it.
Anyways, that’s how I picture the differences, mechanically in design and philosophically.
ADDENDUM: Sheldon Brown's Freewheel or Cassette?