LED is digital, the only way to see in between two LEDs is sometimes they can flicker and/or be dimmer.
Needle is analog, so there are infinite amount of spaces inbetween. You can see how close to the centre the needle is exactly.
LED or needle, actually not important. When you look for tuner should look for:
1) Precision. Boss TU-2 gives +/- 3 cents. Korg DT-10 have +/- 1 cent. Peterson Strobostomp has an amazing +/- 0.1 cent (which is nuts. I doubt many people can hear 0.1 cent difference. And I very much doubt anyone can adjust his tuning head by 0.1 cent)
2) Response. Very important when you want to tune fast on stage. Some tuners you pick the string straight away you can see the note on the screen. Some you have to wait a while. Some go nuts and you see disco lights before it settles down. DT-10 has a super fast response. TU-2 has an alright response but i'm an impatient person. Strobostomp I never try before but I heard its pretty damn fast.
3) Display. Some display so bloody small you have to put your face right in front to see. Or some no backlight then you onstage have to use torchlight. Then also the disco light or needle on ecstacy problem where when you pick the string they jump all over the place for a while. Not something you want to see when the audience and your band is waiting for you to tune.
That said, I'm very impressed with the Korg DT-10. Fast response. Big and clear display. Precise enough for my liking. You could get a Strobostomp if you have serious cash though. I reckon it's better. Or if you not looking for a stage tuner then there are many more to consider. Do realise that even if the tuner tunes 0.1cent, just by pressing slightly harder on the strings, you are already probably off perfect. Not to mention the classic intonation problem.
Anyway since I have the DT-10 let me rave about it a bit more.
a) I wanted to buy it a year ago. But no cash, then when I had cash, city music say they no longer bring it in :evil:
b) So I use the TU-2 all the while, but I didn't like all the extra functions and the slightly slow response
c) DT-10 sucks a bit of tone, I noticed
d) Can be solved by modding to true-bypass (TU-2 very difficult to do this mod) or putting it out of the loop
e) if you strum a major chord (1st, 3rd, 5th only) IT SHOWS THE CHORD! never saw a tuner do that before
f) city music recently brought in a few
g) I bought the last one