To each his/her own. I have a lot of sampled instruments in my MIDI arsenal. I have had great results using MIDI based backing tracks and nobody has ever complained about the tone.
I can cover the parts with slightly different sounding instruments, or entirely different instruments so the audience hears the song but doesn't hear what sounds like the original recording in the background.
And I can arrange the song to my heart's content - transpose it without munchkinization, extend it for some soloing or to keep the dancers on the floor longer (especially those 2 minute radio cuts), add a real ending instead of a fade out.
I can play the background vocal parts on synth or instrument samples so the audience doesn't hear stranger's voice singing the background vocals like so many karaoke tracks.
IMHO fade outs, background singers, and identical to the recording instruments are dead giveaways that you are doing karaoke -- but to tell the truth, I listen with musician's ears so I don't know what gives it away to the audience member that can tell the difference.
All I know is what I try in front of the audience, what works, what doesn't work, and what the people who hire us tell us about other groups. I've been in the duo since 1985, we've played on cruise ships, 5 star hotels, Television (CBS, NBC, ABC, MTV and the BBC), Yacht Clubs, Country Clubs, etc., from the US to the People's Republic of China (by invitation) so we must be doing something right.
But let me stress, the way we do it isn't the only right way to do it. I've always said there is more than one right way to make music. It works for us, and it works well for us.
I share what works for us. I've talked about gear, set lists vs playing the crowd, reading the crowd so you know what to try first, stage attitudes, what to do if you have a musical train wreck, and quite a few other topics on these forums. All are my opinion, all are what works for me, all are intended to be shared in the spirit of helping my fellow musicians the way my fellow musicians help me.
From the thousands of posts I've made, take what works for you, ignore what doesn't work for you, and please share what works for you with the forum so we can all learn from your successes and failures.